Consequential Blunders People Make When Applying for Mortgages
Most Americans could never turn their dreams of homeownership into a reality without a manageable mortgage. That being the case, it pays to do your homework before submitting home loan applications to various lenders. Mistakes made during the application phase can result in loan rejection, thereby forcing you to hold off on becoming a homeowner. In the interest of being approved for a good mortgage and procuring your first home, take care to avoid the following blunders when applying for home loans.
Settling for Unfair Terms
It’s easy to see why homeownership is such an appealing prospect for so many people. However, you should never allow your desire to own a home to entice you into committing to an unfair and/or unmanageable mortgage. If you’ve had multiple loan applications rejected, the temptation to settle for a mortgage whose terms are less than fair is liable to prove overpowering. Still, signing on to a mortgage with exorbitant interest rates and/or enormous monthly payments can place a tremendous drain on your finances and prevent you from deriving any actual enjoyment from homeownership. You should also keep in mind that monthly mortgage payments are far from the only regular expenses associated with owning a home. Property taxes, home insurance and utilities are just a few of the costs you’ll be saddled with on a consistent basis.
This is why it’s important to carefully review the terms of any mortgage for which you apply. Additionally, try to limit your options to lenders who are known for offering fair terms to borrowers. Fortunately for anyone looking for a mortgage in Fairfax, VA, they should have no trouble finding an abundance of fantastic options.
Failing to Pay Down Debt
It should come as no surprise that lenders generally aren’t amenable to taking chances on applicants with copious amounts of outstanding debt. A mortgage loan represents a tremendous responsibility, and if an applicant is unable to meet their current financial obligations, what reason do lenders have to assume they’ll be able to keep up with mortgage payments? In other words, if you apply for a mortgage loan without paying down existing debt, there’s a good chance your application will be rejected.
With this in mind, make sure to get a handle on your existing debt before submitting any loan applications. This may mean waiting a little longer than you’d like to become a homeowner, but it will ultimately make your dreams of owning a home far more feasible. So, if you’re currently saddled with a mountain of debt, make some major headway into it in advance of applying for a mortgage loan.
Accumulating More Debt During the Application Process
It’s generally not a good idea to accumulate more debt while a mortgage application is under review. So, if you have absolutely no choice but to make a large purchase during the application process, avoid putting it on credit. If you’re unable to pay for such a purchase in cash, consider putting it off for a while or asking a trusted friend or family member for a short-term loan.
Not Having a Consistent Source of Income
Many mortgage lenders expect applicants to have a consistent source of income. This doesn’t necessarily mean having a job, either. For example, if you have a pension, disability payments or profitable investments, some lenders may overlook the fact that you lack traditional employment.
However, since most people’s regular income comes from jobs, you’d do well to avoid quitting your current job during the application process. Unless you have another position that pays a similar salary lined up and ready to go – and can show lenders proof of this – it’s strongly recommended that you remain gainfully employed throughout the aforementioned process.
In the absence of a good mortgage, homeownership is liable to prove eternally elusive. As such, it behooves every prospective homebuyer to regard the mortgage application process with due seriousness. Failing to cross your t’s and dot your i’s before submitting a loan application is liable to facilitate rejection from a host of lenders. Fortunately, the prep work involved with applying for mortgage loans shouldn’t prove unreasonably challenging – particularly if you have the right tips at the ready. Furthermore, avoiding the blunders discussed above can do wonders for your odds of approval.