Home Buyers, Money and Mortgage Common Mortgage Mistakes to Avoid
What are the Most Common Mortgage Mistakes?
Your offer on your dream home was accepted! Do you know how to acquire a mortgage? With excitement running high, it’s common to misstep when it comes to the next steps. There are certain things that buyers shouldn’t do when it comes to applying for a new mortgage. Read on to avoid these common mistakes:
Do Not Pay Off Big Debts
Try to avoid paying off your debt right before shopping for a mortgage since new activity can hurt your credit score. Instead, check your credit report six months before you apply for a loan. This way, you can check which loans to pay off and a recent payment won't cause your score to drop.
Do Not Make a Huge Credit Change
Along with big payoffs, do not open up new credit card accounts or use your current credit to make a large purchase, like a new car. New inquiries can be a red flag to lenders and also negatively affect your debt to income ratio. Another big mistake is making large deposits or withdrawals from bank accounts or other assets. If lenders may think you’ve obtained a loan, which would also impact your debt-to-income ratio.
Do Not Switch Jobs
If you are contemplating switching jobs, you may want to wait since lenders prefer candidates to remain at their job for at least two years. When you change jobs, your continuous record of income and employment is disrupted. Staying at your current job shows that you are stable enough to qualify for a mortgage. While a new job can provide more income, it could jeopardize the best deal on your mortgage.
Do Not Skip Your Research
At HomeHunt, we have mortgage specialists who will help you throughout the entire loan process. There is a lot that goes into buying a home, so you want to make sure you have the right professionals on your side. Even a fraction of a percent lower on your interest rate can lead to thousands in savings. Therefore, you want to make sure you work with a lender who has your best financial goals in mind.
Do Not Spend All Your Savings
You should have a good savings plan in place for fees at closing, such as the down payment, the origination fee, title insurance, homeowners' association dues, and taxes among other costs. In some cases, you can work with the seller to have them cover some or all of these costs, but you will need to put some money down at closing regardless. Buying a home is a big decision and having a savings plan is critical for closing on time and avoiding hiccups throughout the process. For help starting a savings plan, refer to our free eBook, Stop! Don’t Be House Poor!
With the right professionals on your side, you can avoid common mortgage mistakes. For more tips, contact a HomeHunt agent today.