Are you considering applying for a new home loan? Avoid these common mortgage loan application mistakes that can prevent you from being approved and buying the home of your dreams.
1. No Pre-approval
Pre-approval is essential for looking like an excellent option to sellers and often a requirement for consideration.
Before bidding, set up a pre-approval with your lender.
2. Not Knowing Credit History
Any lender will look into your credit history. A poor credit score will affect your chances of being approved.
Make sure to request your credit report from a reputable source and work with your lender on any issues.
3. Inaccurate Reporting
Lenders use advanced algorithms to catch any fraud or lack of consistency in your applications. If you falsify your income or underestimate your spending, you can be denied or even have charges brought against you.
Make sure to be as accurate as you can, and if you notice a mistake, immediately contact your lender.
4. Insufficient Research
It may seem more convenient to work with a bank you currently have an account with. However, you can miss out on better rates.
Make sure to look into different options and work with your lender to find the best choice for you.
5. Applying Too Many Times
Each application you submit shows up in your credit history, and any lenders will notice this and assume others denied you. Only apply when you’re ready for a commitment.
6. Missing Payments
Lenders are looking to work with reliable people that will repay their debts. Therefore, consistently missing payments on other loans, like credit cards, will raise a red flag. Make sure to stay up to date.
7. Bad Savings Structure
Savings are essential in life and great for applications, as you look responsible. However, lenders look for borrowers that have saved over time rather than suddenly withdrawing or depositing.
8. Applying for a Home Loan During Probation or Significant Life Changes
The best borrowers have stable lives and financial situations. Significant life changes, such as quitting a job, may result in denial.
9. Large Deposits
Loans require documentation of your expenses, and large deposits or withdrawals can look suspicious to lenders.
Make sure to have a steady flow into savings and record each transaction.
10. Asking for Too Much
Traditional banks generally approve larger loans and prefer them over smaller loans. However, alternative lenders usually lend smaller sums. Make sure that you can afford the loan you’re applying for and that your lender is a good fit.
Need Help with Your Application?
At Mortgage Solutions Financial, we have a team of experts readily available to guide you through every step of the mortgage loan application process. Contact our office today to get started.