Buying a home can be intimidating, but it doesn’t have to be! With a great lender on your team and avoiding these six most common mortgage mistakes, you can get through the process relatively stress-free.
While paying off debt is a great feeling, try to avoid paying off things like your student loans right before you apply for a mortgage. It sounds counterintuitive, but paying off a loan or closing a paid-off credit card may cause your credit score to drop. This is because several factors go into calculating your credit score and paying off a debt reduces your credit mix, length of credit history, and credit utilization.
So before you apply for a mortgage loan, pull your credit report at least six months before to review for errors. If any are found, dispute them with the credit bureau.
Avoid taking out new lines of credit or making large purchases like a car before applying for a mortgage. Lenders will pull your credit report for review and don’t want to see that you’ve made purchases that could affect your ability to get a loan.
Instead, save large purchases and new lines of credit until after you’ve closed on your home.
Before applying for a mortgage, do your research. Take the time to go to different mortgage companies and banks to understand what programs are available, as well as current mortgage rates. Don’t miss out on the best deal for you and your situation.
Guild Mortgage offers a Lock and Shop program* which allows you to lock in your rate for 120 days, even if rates go up in the meantime as you shop for a home. You can take advantage of a one-time float down option if rates go down.
We’ve said it many times: When you’re getting ready to start applying for a mortgage, make sure that you get pre-approved! Pre-approval shows sellers that you have the backing of a lender and may increase your chance of your offer being accepted.
Even when you get pre-approved for a mortgage loan, remember to stick to your budget and avoid stretching it too thin. In addition to your monthly mortgage payments after purchase, you will have to pay out-of-pocket for closing costs and other fees.
Set a budget for not only your regular monthly expenses, but fees associated with purchasing a home. If you haven’t already, set up an auto-deposit into a savings account to easily set aside money.
In general, lenders like to see that you’ve been at a steady job for at least two years. So if you’re thinking about changing jobs before buying a new home, you may want to hold off. But that’s not to say that if the opportunity for a better job comes up you shouldn’t take it. Just be ready to explain the situation to your lender.
For most people, buying a home is the largest investment of their lives. Understanding a few of the roadblocks will help ensure a smoother process. By taking these actions while you are preparing will improve your chances for qualifying and finding a home you will love. Contact us today to answer any questions about the home financing process and to get prequalified.
*Upfront lock-in fee required. Click here for more information.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.
Short-term real estate rentals have gained popularity in recent years and seem likely to maintain their appeal. Many travelers and tourists now seek out these properties as a cost-effective and interesting way to secure accommodations for a few days or weeks. Owning a short-term rental property as an investment is in many ways similar to […]
Putting a home into a trust may seem like an option reserved for older homeowners who have paid off their mortgage and have accumulated an estate, including assets such as a home, motor vehicles, various investments, boats, rental properties, furniture and even a vacation home. However, having a home that’s owned outright is not necessary […]
The start of a new year is often seen as the time to make major changes in life. While many people resolve to start hitting the gym, losing weight, reading more, or making a career change, others may decide to buy a new home in the coming months. That’s a great goal, one that can […]
