Don’t make these 6 mistakes when applying for a mortgage
There’s a road you will head down when you first decide that it’s time to buy a home. Before taking even the first step, you’ll encounter a fork in that road. Sadly, most first-time homebuyers take the wrong fork and end up disappointed.
Here are 6 common mistakes people make before purchasing a home.
Do you know what’s lurking in your credit reports? It’s bad enough that nearly 80 percent of credit reports contain errors, but did you know that nearly a quarter of them contain mistakes so bad they result in a denial of credit? Don’t be among those rejected—order copies of your credit reports and go over them, looking for errors. You are entitled to free copies of your credit report from each of the three major credit bureaus every 12 months. Get yours at AnnualCreditReport.com. If you find errors, file a dispute and clear up the problems before applying for a mortgage. The Federal Trade commission offers additional information on how to obtain your free credit report and how to dispute errors you may find in your report.
2. Shopping without knowing how much you can spend
That fork in the road we spoke about earlier? Sometimes it takes homebuyers online, looking at homes for sale and, sometimes, to open houses or new-home communities. Big mistake. Homebuyers, especial first-timers, tend to overestimate how much they’ll be able to borrow. If you’re among them, and you look at homes, you’ll most likely be viewing those that are out of your price range and, after that, those that you can buy will pale in comparison. Don’t set yourself up for disappointment – see a lender before looking at homes for sale. Click here to start the pre approval process to speak with one of our preferred lenders who can help answer any financing questions you have. It's a free service we provide so why not take advantage of it?
3. Not saving any money
It amazes us how casually many people treat the sale and purchase of an investment as large as a home. Many in fact don't know how much to save, or what expenses to be ready for. This is where we come in. It's important to know how much you need to save for closing costs, inspections, and your down payment ahead of time.
You don't always have to put down 20% to get into a loan. In fact, there are a number of conventional, FHA, and first time home buyers programs that can help assist with that regard, and where downpayment amounts can range from only 0%-3.5%! There will also be closing costs that are typically another 2-3% of the purchase price. The smartest thing to do at any stage is to save money if you can to help with these expenses. There are a number of mortgage calculators online that can help you figure out your monthly payment including, breaking down your payment with principal, interest, taxes, and insurance, or like we lending and real estate geeks like to say PITI; we like to abbreviate everything. Any one on our team can also provide you an estimated amount you'll need to come up. Until you obtain a mortgage, remember to start saving! Remember if you don't need to use it even better, but at least it's there incase you do.
4. Not being honest
Remember “liar loans?” It wasn’t that long ago that lenders were approving mortgages for just about anyone with a heartbeat. Think of those loans as dinosaurs, because they no longer exist. Lending standards have tightened considerably since then and lenders are bound by statute to ensure that the borrower can afford to make payments on the loan. This means that you are required to provide documentation that proves the income you state on your application. So, be honest on all parts of the loan application. For a list of required documents they will need to review to issue you a preapproval email us here and we'll send you the full list or most common documents that will be needed.
5. Switching jobs after loan approval
A common requirement for loan approval is your employment situation. Most want to see at least two years with your current employer (or in your current field), or two years in business if you are self-employed. It is important to not make any changes to your employment situation during the period of time between loan application and closing on your new home.
6. Changing your financial picture
Yes, it’s tempting to start purchasing furniture and appliances as the closing date draws near. But, DON'T DO IT!! The lender will run one final credit check, just before closing, to ensure that nothing in your financial picture has changed. If you purchase items on credit or open new credit accounts, your score may go down. Also, the new debt you’ve taken on may change your debt-to-income ratio and you’ll be denied the loan and the closing will be cancelled or postponed. That means no more home : ( So be careful, stay steady, don't make any large purchases, don't pay off any large debts unless instructed to do so by your loan officer. Think twice about buying the cherry red sports car. At least wait until it's officially recorded at the county and the deal is closed. For many real estate consumers, the entire mortgage process is foreign and, quite frankly, dull. But, it involves your money—and lots of it—so learn as much as you can and you should sail through the process. Give us a call for a less stressful, informative experience, that is actually fun!
Have Questions? Need Help With Real Estate? Trust The #1 Site www.SweeneySells.com Scott Sweeney Realtor - M&M Real Estate BRE Lic# 01938720 9008 Elk Grove Blvd. Elk Grove, Ca 95624 707.330.2324 Cell 916.685.2390 Office Scott@mmrealestate.net www.SweeneySells.com www.mmrealestate.net