As with any major financial event in our lives, securing a mortgage can be no easy task. Complex and time-consuming, it’s still possible to speed the process along if you’re cognizant about avoiding some of the pitfalls that often accompany mortgage applications.
1.) NOT CHECKING YOUR CREDIT: One of the absolute first things you should do when contemplating a mortgage is to check your credit score. Ideally, this should be done in advance, which will not only give you ample time to improve your score (if needed), but it will also allow you to understand what type of interest rate you can expect.
2.) APPLYING FOR NEW LINES OF CREDIT: Securing a mortgage is basically the same as securing a large line of credit. Therefore, during the entire mortgage process, it’s important to refrain from applying for any other type of credit because it will make you appear to be a riskier prospect. In fact, if your overall score takes enough hits, it may actually hinder your eligibility or cause your interest rate to rise.
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3.) NOT CONSIDERING THE TOTAL HOUSING PAYMENT: While many new homebuyers may think that their mortgage only includes what they’re going to pay for the home itself, it actually includes an assortment of costs such as principal, interest, taxes, and insurance (PITI). Property taxes and an insurance premium should always be factored into your overall mortgage budget.
4.) JOB HOPPING: One of the keys to mortgage approval revolves around a steady employment history and an even more steady income. Your underwriter will want to be sure that the amount of money you bring in each month is consistent. Therefore, it’s important to resist the urge to jump from job-to-job before applying—wait until you’ve closed on your mortgage first.
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5.) NOT READING YOUR LOAN DOCUMENTS: None of us enjoys reading the fine print, especially when there’s a lot of paperwork involved; however, it’s your responsibility to read and accept the terms of your new mortgage. Don’t worry about feeling stupid or silly if you don’t understand something—ask questions! You’ll probably feel worse if you wind up with terms that you either don’t want or don’t agree with.
Pam Wright | OnQ Financial | www.onqfinancial.com | 404-445-1033
