You’re ready to move up from being a tenant to a homeowner. Have you made the necessary preparations?
Many people — perhaps in their excitement — fail to do the basic homework that comes with getting a mortgage. This can lead you to many pitfalls, making you end up with a mortgage you can’t afford, or being turned down for a mortgage you were sure you could afford.
Here are some common mistakes you should avoid when applying for a mortgage:
Not Knowing Your Credit Score
Never apply for a loan — let alone a mortgage — without knowing what your credit score is. In fact, it pays to know your credit score. Through this, you have an idea how to set your expectations. Even if you find out that you have a low credit score, at least you can take steps to improve it before trying to apply for a loan of any kind.
Not Knowing How the Mortgage May Impact Your Life
A new home may be your ultimate dream or your gift to yourself and your family after years of renting and waiting for a chance to own a home. If you’re not careful, your loan may end up owning you. American Loans recommends using a mortgage payment calculator. Utah lenders may offer this for free to those interested in applying for a mortgage. By using this, you can plan your budget properly so your loan doesn’t end up swallowing your entire paycheck.
Buying Something Expensive Before Getting a Mortgage
Even if you’ve been approved for a mortgage, that doesn’t mean you are free to get another loan, especially something rather large. This might get your mortgage rejected at the last minute because your financial circumstances have changed. One of the most common mistakes of this magnitude is applying for a car loan before or immediately after getting approved for a mortgage.
Quitting Your Job and Not Having a Backup Plan
Even if you have plans lined up, don’t quit your job before or immediately after getting a mortgage. In the eyes of the lender, this means you are no longer as capable of paying your mortgage, so they are more likely to revoke the approval.
Applying for a mortgage you can afford can be easy, but you have to be prepared if you want to be approved.