Getting a mortgage is a must-do step toward buying a home for many buyers. But if you’re unfamiliar with the process, applying and getting approved for a loan can feel confusing and overwhelming. If you don’t know what you’re doing, you could make a mistake that jeopardizes your home purchase.
So what, exactly, are those common mortgage mistakes, and how do you avoid them?
A recent article from realtor.com outlined common ways home buyers mess up getting a mortgage, including:
Waiting until you have a 20 percent down payment is a common mistake. For conventional loans, putting down 20 percent as a down payment can help you avoid paying private mortgage insurance (PMI), which adds on an extra monthly fee, typically between .3 percent and 1.15 percent of the total loan amount. However, if you wait, you could face higher interest rates and home prices in the future, ultimately costing you more money than paying for PMI. By being proactive and exploring your options with lenders now, even if you’re not quite ready to put 20 percent down, you can potentially save a significant amount of money in the long run.
Changing jobs is another common mistake. When you apply for a mortgage, lenders are looking for signs that you can reliably pay back your loan. They’ll generally look for you to have at least two years of consistent income. This means that if you’re considering buying a home, now is not the time to make a major job switch. By avoiding changing jobs during the home buying process, and waiting until after you’ve closed to make any moves in your career, you can demonstrate stability to lenders and increase your chances of getting approved for a mortgage.
Making big purchases is a mistake that can have a significant impact on your mortgage application. We all want to be able to buy the latest and greatest, but when you are thinking about buying a home, it is best to put those purchases on hold. Any change to your credit, such as applying for a new card to cover new furniture, can affect your credit score and debt-to-income ratio. By being mindful of your spending and avoiding major purchases during the home-buying process, you can maintain a healthy credit profile and increase your chances of getting approved for a mortgage.
At Set Your Rate Real Estate, we ensure you fully understand the home-buying process and are well-informed about your options. Let us guide you through every step with our expertise and personalized service. Ready to leap into homeownership? Call us today at 301-733-3267 to discuss how we can help you achieve your real estate goals.
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