A crucial part of the home buying process is securing your financing with a mortgage. However, there are mistakes that people make that can cause this part of the process to not go as expected. Here are some of the mistakes you should avoid making when getting a mortgage.
Waiting To Get Pre-approved
Many people don't think that they need to get a mortgage pre-approval if they are just casually browsing. However, you don't know when you are going to find a home that you love. Without a mortgage pre-approval, you may not be able to find a seller that is willing to accept an offer from you. You may find yourself scrambling to do this over the weekend when viewing open houses, and then not able to get your complete offer with the seller quick enough. You could end up losing a home because you don't have the pre-approval ready to go.
Making Big Purchases
Many people make big purchases while their mortgage is being approved; this is a mistake. You may be tempted to open up a new line of credit at a local home improvement store to buy various things you need for your home soon after moving in, but this could cause problems with the mortgage approval process. For example, all of those purchases on the credit card are going to show up as debt to a mortgage underwriter. If you end up exceeding the debt-to-income ratio needed to buy a home, your mortgage would actually be denied because of all of the purchases you put on your credit card.
Making An Offer The Is Above The Appraised Value
Be aware that the home that you want is going to be appraised by your lender before they approve the purchase. This is to ensure that the home is worth the amount of money that they are giving you and that they will not own a home that is worth less than the sale price if they need to take possession of the home.
The problem that you may run into is when you need to bid high on a home in a very competitive housing market, which can end up causing you to overpay for the home. The lender is only going to give you enough money to cover the appraised value, so if the agreed-to sales price is more than the appraised value, you must make up the difference with a bigger down payment. If you don't have the cash on hand, you may not be able to get a mortgage.
Talk to a mortgage lender for more information.
Share22 January 2021
I always wanted to buy my own home and after saving enough money for a down payment, I decided that it was time. Before I started looking at houses, I talked with a loan officer about financing. I wanted to know how much money I could borrow so I could look at houses in that price range. I was very happy after my meeting at the loan company and I was ready to start house hunting. My name is Jarod Spangler and I'm now a homeowner. If you have the dream of owning your own home, I think you'll find my blog of help to you. I've documented my journey of saving money, securing a loan and purchasing a house. To help you become a homeowner too, I'm offering advice and tips of things that I've learned along the way.
