Mortgage Mistakes to Avoid

May 24, 2015 | Posted by: Dawn Stephanishin

If you about to apply for a mortgage or are currently seeking approval for a loan, here are some pitfalls to avoid.

Check your credit. You may have issues with your credit that you don’t know about. It could be as simple as a late payment on an account you forgot about. A small mistake may make the difference between an approval or a rejection, so take the time to address any issues that can be resolved before you begin applying for your mortgage.

Don’t apply for new credit and avoid making any major purchases. Applying for new credit or making a major purchase (like a vehicle, for instance) can have a dramatic effect on your debt load and your credit score. The mortgage industry has changed in the last decade and lenders are more cautious. Take care not to underestimate the scrutiny you will be under throughout the process.

 Don’t underestimate your housing payment. Your housing payment is a lot more than just your mortgage payment. You should also take into account insurance, property taxes and the cost of repairs and maintenance. Renters should consider the bills (like water) that they haven’t paid before. Regardless of the amount your bank approves you for, take the time to carefully go over your personal income and expenses and find out for yourself just how much you can afford.

Don’t make any large deposits. Mortgage lenders want to know that you can afford the loan you’re asking for. Large deposits suggest private family loans or gifts and create the impression that you can’t afford the loan on your own. Gather all of the funds you need to purchase your home before you start your loan application process. Any large deposits that you make after the loan application may be tracked.

 Stay in your current job. Changing jobs will complicate the approval process because your lender will be forced to reevaluate the stability of your position. Even if you’re moving to a job that has a higher rate of pay, changing positions in the middle of receiving a mortgage loan is almost never a good idea. Instead, ask your prospective employer if you can start after your closing date.

Always get a pre-approval. A mortgage pre-approval provides a guideline on what you can spend on a home and will reveal potential issues. Most pre-approvals involve the lender verifying your credit and employment. When these steps are taken, a seller is going to feel better about your ability to purchase their home – plus, it’s a valuable asset if there are other buyers making an offer at the same time.

Shop around. Some home buyers underestimate the difference just a fraction of a percent can make on their mortgage loan interest. It’s a good idea to consult a mortgage broker to find the most favorable terms possible.

 Keep it simple. Exotic loan packages often come with complications and catches. Keeping your mortgage simple is usually your best bet. When you introduce other types of mortgage loans you end up with more restrictions and a higher possibility of running into problems down the road.

 Read your documents. Mistakes happen. Your real estate agent will do their best to protect you during the purchase of a property but what occurs with your mortgage is between you and your lender. Read your documents and keep an eye out for anything that hadn’t been properly discussed and explained to you. Before you sign your documents, read each page and don’t be afraid to ask questions. The terminology used in loans can be very confusing and you aren’t expected to understand everything right away.

Lock in your rate. Mortgage rates fluctuate daily so lock in your rate to prevent any surprises when you finalize your loan. Mortgage loan rates are usually locked for a specific period of time, but you can extend the lock you have on your mortgage rate if your transaction is taking longer to close. 

Dawn Stephanishin is a Vernon Mortgage Specialist who can help you find the best Vernon mortgage rates - whether you're a first time buyer or looking for Vernon mortgage renewals or Vernon mortgage refinancing, contact a qualified Vernon mortgage broker today.

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