How to Avoid Making Them

So, you’re just starting the mortgage application process or have already submitted and are waiting to hear back. You think that you have done everything right, but have you?

Mortgages can be confusing, and you may not even know what could derail your chances of getting a loan approved.

We’ll take a look at the 5 most common mistakes that can ruin your mortgage application.

  1. Leave your job while your application is in process
  2. Apply for new credit (because you want to buy a boat and think it doesn’t matter)
  3. Delay in locking the rate
  4. Delay providing documentation
  5. Not being transparent with your loan officer

Leave Your Job While Your Application is in Process

An employee who quit their job while going through the mortgage process.

When applying for a home loan, ideally you have been with your current employer for at least two consecutive years. This shows that you receive a stable income and can fulfill a long-term commitment.

Since you’re about to lock in for 15 to 30 years of payments, the lender wants evidence that you’ll be able to make consistent payments.

That means along with the job stability, you will also need to prove that you’re making enough money to pay for your home loan. Just because you have been working for years, does NOT guarantee that you’re making enough money to pay off your mortgage based on your loan terms.

Odds are that you’re buying a home that is reasonably close to your place of employment, so you probably don’t intend on quitting, but this mistake is more common than you’d think.

Apply for New Credit

I get it, you’re excited about moving into a new home and want all the fun toys that go with it. Such as a boat to take out on the weekends!

Well, just hold up a moment, chief.

Applying for a new line of credit while going through the mortgage process can seriously damage your credit score and raise your debt load.

Don’t pull the cart before the horse. Yes, I understand that you REALLY want to enjoy your new home, and that’s great! Just be mindful of any big purchases before, during or even after your home loan is approved.

Delay in Locking the Rate

When you apply for a loan, you are given the option to lock or float the rate. Make sure you fully understand what both choices mean for you.

If you fail to lock the interest rate on your mortgage, it can go up by a lot.

Depending on your preference, you can lock early or later during your application process.

Just make sure that you get it in writing, otherwise it really doesn’t mean much.

Delays When Providing Documentation

You are the one trying to buy a house, so it is entirely up to you to ensure that the proper documentation is provided within a timely manner.

Don’t wait, and ideally, you’ve already figured out EXACTLY what you’ll need to provide before applying or right at the application start.

And don’t be afraid to contact your loan officer, they’re your guide through the process and should be available whenever you need help.

Not Being Transparent with Your Loan Officer

Don’t try to be sneaky and inflate your total income, exaggerate your assets or anything that equates to not being 100% transparent with your loan officer. That is a big mistake that will ruin a mortgage application.

This is more difficult than before the subprime meltdown, but the concept remains the same.

Qualifying income is what matters, don’t rely on one-off bonuses or any forms of inconsistent income.

Work with a Credible Lender to Avoid Mistakes that Can Ruin Your Mortgage

So, how can you best position yourself to successfully make it through the mortgage process and get approved for the home loan you want?

It’s easy, just work with a credible mortgage lender who can advise you of best practices every step of the way.

Applying for a home loan can be stressful or downright frustrating, but it doesn’t have to be.

Call Carlos at (310) 956-0180 to talk with a real human and let Pizarro Mortgage Banking fix all of your mortgage frustrations.

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