Do You Know The Mortgage Mistakes You Must Learn To Avoid?
Homebuyers tend to make a lot of mistakes way before they start looking for a mortgage lender. These mistakes can ruin the chances of any homebuyer of qualifying for a mortgage. Outlined are mistakes you must avoid so as to qualify for a mortgage:
Closing that unused credit card
At times it may seem like a good idea to close a credit card that you no longer use, but in the real sense that does more harm than good. For example, if you own five credit cards and each has a credit limit of three thousand dollars that shows that you have a total of fifteen thousand dollars available credit. If you close one credit card your available credit reduces to twelve thousand dollars. If you happen to have five thousand dollar credit card debt, five thousand dollar credit on fifteen thousand dollars will look better, according to lenders than in the case of twelve thousand available credits.
Making a big purchase
If you are planning to apply for a mortgage, you must resist any urge of making a big purchase. Do not go loading your credit card with the charge of an entire living room set of seats. This not only makes it hard for lenders to work with you, but also throws your debt-to-income ratio out of proportion. Lenders are comfortable working with someone whose total monthly debts do not exceed forty three percent of their gross monthly income.
Most mortgage lenders prefer that you have a stable job and you have been working for at least two years, this assures them of your stability. If you change jobs before the mortgage loan closes, then you could lose the chance to qualify for a mortgage since lenders will think that you might lose the job. Loss of a job means that you will not manage to meet your monthly mortgage obligations. If you must change your job, do so after you have closed the mortgage loan.
That missed credit card payment
A credit card payment is considered late if the payment is made thirty days past the supposed due date. Once you pay your credit card late, this remains in your credit card records, causing lenders not to be so comfortable working with you. This automatically reduces your chances of qualifying for a mortgage loan.
Missing the lock period
Missing the lock period is one mistake that causes your mortgage to be quite expensive. You happen to get your hands on a good interest rate and you even pay extra so as to ensure that the lender locks the rate. The problem kicks in when you delay in providing the required paperwork to the lender to such an extent that the interest-rate lock expires. In such a case the interest rate rises, causing a rise in your loan payment each month. Ensure that you have all the required paperwork ready before you start on the loan application process this will help you save time and money.
Mortgage loans are supposed to ease the financial burden of any homebuyer, ensure that you avoid the mistakes mentioned above and you will be having no reason not to qualify for a mortgage loan.