Friday, April 5, 2013

Applying for a mortgage? Avoid These Common Mistakes

Applying for a Mortgage? Avoid These Common Mistakes

If you're a first-time buyer, an itch to start looking at homes typically starts just after you make the decision to buy. The feeling may be so overwhelming that it's the very first thing you do. That's mistake number one: Looking at homes without knowing how much you can spend on a home isn't just a mistake, it's silly.
So, how do you know how much you can spend? By visiting a lender and getting preapproved for a mortgage. Sure, it's not as exciting as actually looking at houses, but it's the first step in a process that, if not followed, presents plenty of potential pitfalls that may make it impossible for you to purchase a home.
Before you put pen to paper, though, signing away a big chunk of your salary for the next 30 years, do yourself a favor and prepare.

Check Your Credit

Did you know that up to 79 percent of Americans' credit reports contain errors? Twenty-five percent of credit reports contain errors that may result in the denial of credit, according to the U.S. Federal Reserve. That's why it is so important that you check yours before setting foot into a lender's office.
Everyone is entitled to a free copy of his or her credit report once a year. Get yours at AnnualCreditReport.com, the only source authorized by the Federal Trade Commission to provide the free credit reports.
Fix any issues on your report before applying for a mortgage.

Tell the Truth

Not too long ago lenders were busily providing what have come to be known as "liar loans." These were mortgage loans to people who couldn't afford them and were obtained by means of a "no document" process, meaning the applicant didn't have to prove his or her income or verify assets.
Those days are over, and obtaining credit is nowhere near as easy as it once was. Although you may be tempted to stretch the truth on your application to ensure you get the loan, don't give in to the temptation. The lender may dig up the truth, and you will be denied the loan.

Turn Down the Job Offer

One of the first things the lender will look at is your employment history. They want to see a minimum of two years with your employer or in your current field. While switching employers during the loan application process may not derail the loan, it will most likely delay the process while the new employment and salary are verified.

Don't Make Major Purchases

House hunting is exciting and shopping for the new house is probably top-of-mind. Don't do it.
The lender may run what is known as a "soft pull" of your credit just prior to closing escrow. If, for some reason, the closing is delayed beyond 30 days, you can almost count on the lender pulling your credit again.
If new debt is high enough to change your debt-to-income ratio, you may no longer qualify for the mortgage. So keep the credit cards safely tucked away in your wallet until after escrow closes.
The loan application process isn't nearly as glamorous and exciting as touring homes and shopping to outfit the new home, but it's the most important step in the process. Don't make any major financial or life changes between applying for the loan and closing escrow, and you should have no problems.

 Don't Settle for Average Agent

When you are looking for a home you are making the largest single investment of your life.  Make sure you have someone looking out for your best interests in the transaction.  The Raymond Edler Home Team prides itself on building a business based on referrals of past satisfied clients.  Call us to help guide you through your next home purchase.

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