Graduating from being a renter is among the largest life changes many of us undergo on the path to adulthood. However, outside of a small percentage of exceedingly fortunate individuals, most people rely on mortgages to afford the homes they wish to live in. As anyone who’s applied for a mortgage can attest, the application and review process can be a doozy. During this time, even mistakes that are seemingly inconsequential stand to tank your chances of becoming a homeowner. To help ensure that your mortgage application goes off without a hitch, take care to avoid the following blunders.
Having Large Amounts of Outstanding Debt
Submitting a mortgage application when trapped under a mountain of debt is unlikely to work out well. Most of us live with some level of debt. Credit card bills, student loans and car payments are just a few common forms of debt that the majority of Americans regularly deal with. If you’ve managed to keep certain debts – such as student loan bills and car payments – under control, many loans officers are unlikely to take any points off. However, if you’ve accumulated a fair amount of unpaid credit card debt or defaulted on any previous loans, this is practically guaranteed to impact your odds of approval.
That being the case, avoid submitting mortgage applications until getting a handle on your outstanding debt. Even if this entails putting your dreams of homeownership on hold, patience can be a virtue in these circumstances. If you’re afraid of losing your chance at snagging your ideal home and absolutely insist on submitting an application posthaste, talk to a close friend or family member about floating you a loan for your outstanding debt. Entering the application phase with little to no unpaid debt will definitely bode well for your chances. Garden State homebuyers curious about just how much debt they’ll need to pay down should brush up on current mortgage rates in NJ.
Quitting Your Job
You’d be hard-pressed to find a loan officer who doesn’t expect mortgage applicants to have a consistent source of income. Unless you’re independently wealthy, most loan officers will expect you to hold a steady job and make a certain amount per year. As such, applying for a mortgage loan while unemployed or leaving your job during the review process can tank your chances of approval. This isn’t to say that you can never change careers or employers, but while your application is under review, it’s strongly recommended that you stick with your current job. Granted, if the work environment is unhealthy, unsafe or outright abusive, your mortgage application should be of secondary importance to your personal wellbeing.
Making Large Purchases on Credit
Few purchases will cost you more than a new home. In fact, homes are the largest investments many of us are ever liable to make. However, while some large purchases are made out of necessity – i.e., homes and vehicles – others represent modern-day luxuries. Cutting-edge video game consoles, big-screen televisions and top-of-the-line entertainment centers are just a few of the non-necessities that people enjoy treating themselves to. While there’s nothing wrong with the occasional frivolous purchase, buying expensive items on credit during the mortgage application process is not going to help your chances of approval.
If it can be avoided, abstain from making large purchases on credit while your application is under review. If you find yourself faced with an emergency situation – like an automotive breakdown or hospital visit – consider requesting a temporary loan from a friend or family member or paying with cash or check. At the end of the day, any large purchase that can be put off should be put off until the review process has been completed.
In the absence of a good mortgage, your dream home is likely to remain forever out of your reach. Mortgage approval is all that stands between many aspiring homeowners and the houses they’ve fallen in love with. That being the case, it pays to do your homework and exercise the utmost caution when preparing your mortgage application. A seemingly inconsequential mistake during the loan approval process stands to cost you your mortgage. In the interest of maximizing your chances of approval, make a point of avoiding the mistakes discussed above.