A mortgage is likely not only to be the biggest loan a person will encounter on their home buying journey, but the rules surrounding it have only gotten stricter. It’s likely you’ll encounter a few challenges during theapplication process, making it imperative to plan ahead.
Stress is inevitable in the home buying process; thus, it’s important to ensure that everything goes well when applying for one. Mistakes that’ve been made prior to or during the application can affect your mortgage approval.
6 Avoidable mistakes during the mortgage application process
Having basic knowledge can help avoid these common errors and can definitely save you time, money and energy.
Mortgage Down payment
The down payment refers to cash rendered to secure the purchase of your property. However, the amount of cash you need as a down payment depends on the loan option that you choose. For instance, first-time home buyers can get a mortgage with a minimum down payment of 5% of the purchase price. Take note, the smaller the down payment, the higher the monthly cost will be.
A mortgage affordability calculator can help you work on your budget.
If you were thinking that skipping the pre-approval step can expedite your mortgage application, think again. Getting pre-approved for a mortgage allows you to foresee the amount of your monthly payments and gives the lender time to review your overall financial situation, including your income, assets and liabilities (debts).
A mortgage pre-approval gives you peace of mind as you look for your perfect home. With this step, you can narrow down your search field and find homes that are within your budget.
3. Inaccurate information
When applying for a mortgage, you’ll have to provide your personal information to the lender. This includes relevant information such as your birthday, address, social security number and other personal details.
In addition, you’ll be required to supply proof of income through pay stubs and bank statements, as well as any investments and outstanding debts. Providing inaccurate and outdated information can delay or even derail your application process.
4. Failing to check your credit report
Your credit report reflects your borrowing history and your current finances. It’s recommended to clean up your credit report before your application. Checking your credit report prior to your application helps you determine the odds of approval and increases your chances of getting the best mortgage product for you. It also serves as a basis as to whether you’ll need some time to prepare and boost your credit score.
5. Not cooperating with the lender‘s requirements
Your lender needs a lot of information to be completely informed and to be able to arrive at a sound decision as to whether or not your mortgage application should be approved. This needs a lot of cooperation and coherence on your end, so make sure to provide all the necessary details.
Not being cooperative with the lender may cause delay or even worse, denial.
6. Not working with the right lender
If you’re having difficulties finding the right bank or lender, working with a professional can help. Mortgage brokers work with multiple lenders (big and small) and can help you find the right one that’s most suitable for you.
The Best Resolution
Apart from having basic knowledge in applying for a mortgage, it’s best to speak with a reliable, trustworthy and experienced mortgage broker.