You might currently be in a situation where you are trying to decide whether or not you should get that new mortgage. Many individuals consider applying for a mortgage without taking a few things into consideration. Avoid making a hasty decision without weighing the pros and cons. Whether you’re running into qualification problems or you have higher-than-usual mortgage rate, it is essential to keep these mistakes in mind. Think of these mistakes when you are buying a new home.
1. Going bankrupt
Filing bankruptcy limits your options, so avoid it by paying off your mortgage in a timely manner. Imagine being restricted from getting a mortgage for 7 years! Be sure that you meet the minimum underwriting requirements by keeping your credit score healthy. Remember that any late mortgage payments will surely reflect on your credit report. It will also disqualify you with many lenders or even banks. Make these mortgage payments a priority so you don’t end up on a downward spiral toward bankruptcy.
2. Failing to lock your mortgage rate
There is an option for you to lock or float when applying for a mortgage. Of course, you still need to understand both options before choosing, and you also have to take the interest rates into consideration. Locking your interest rate will allow to you prepare each of your scheduled payments. If you don’t lock the interest rate, or leave it as a floating rate, it has a greater chance of going up. It will be difficult for you to keep up with late payments and the interest rates will eat a large chunk of your payment. It is important that you understand the loan process so you can make the right decision.
3. Not reviewing your credit report
When you’re applying for a mortgage, you should not ignore your credit report as it plays an important role in qualifying for a loan. If you have disputes or your credit score is low, you need to have those errors removed and your score raised before applying for a loan. Lenders or banks will review your credit report and it can be the reason for your disqualification if you have a bad credit score. Even when your application is approved, you are most likely going to pay a much higher mortgage rate with a lower score, which will give you difficulties paying off your monthly mortgage.
4. Not analyzing how much you can afford
It is a life-changing moment to search for property that you can invest in. Problem is, the excitement becomes momentary when the time comes that you have to pay the mortgage rate on a monthly basis. Prior to property search, be sure to get yourself pre-approved or pre-qualified to give you an idea of how much you can afford based on your assets and salary. You will set yourself up for frustration and disappointment if you don’t assess your ability to pay.
5. Having limited employment history
It isn’t the best idea to get a mortgage when you only have a limited employment history. You need to present your proof of income to let lenders know that you are making money while obtaining a home loan. If you keep switching jobs before making an application, it shows you have no commitment and there is a slim chance of getting your loan approved.
If you’re a first-time home-buyer, be sure to verify your assets, credit and employment history. While you might still be able to find a lender who will approve your loan without those requirements, the mortgage rate might not be desirable.
Cape Coral Mortgage, Inc.
3512 Del Prado Blvd. S Ste106
Cape Coral, Fl. 33904
(239) 540 5555