10 Most Costly Mistakes When Getting a Home Loan

 

1.     Excessive use of credit cards instead of keeping balances low, paying more than the minimum payment and paying on time. The best way is to pay off the balances every month.

2.     A bad or late payment record seriously lowers your credit score and can result in having to pay substantially higher interest rates, and an outright refusal of a loan.

3.     Not being honest and upfront with your loan officer and trying to hide the truth about previous bad financial times, can cause these things to come out of the woodwork in the middle of the loan process and result in either a loan denial or higher interest costs.

4.     You must do enough research to know what the closing costs will be, how much down payment is required, and what the ongoing costs will be, to make sure you can afford the payment. Always compare lenders to get the best interest rate you can, as a small fraction of a percent will make a huge difference over the years.

5.     Buying a car or truck or other large purchase before applying for a loan.  This could totally halt your ability to buy a home for many years because it will significantly affect your debt to income ratio which is one of the determining factors in getting a loan.

6.     Applying to several lenders for a home loan to see who has the best interest will result in lowering your credit score. Any good lender can tell you what the rates are based on your current score, your income level and history, and your debt to income ratio. The way to get the best rates is to have a high credit score, a low debt to income ratio, and good steady income.

7.     Interview several lenders and find out what options they offer you, without having them pull your credit. Make sure they have the options you need to get the loan you want.

8.     Ask the lender you are talking to about their track record because the majority of loans applied for do not go through.

9.     The amount of Deposit or Earnest Money you put down on a house will affect how the lender looks at   the risk of giving you a loan. The bigger the deposit and down payment the less risk for him and the  more likely your loan will be approved.

10.  When interviewing a lender, get a list of all the things required during the process so you know what to expect and not be shocked when the subject of underwriting comes up or the need for closing costs arises.

 

Being aware of all the common mistakes will help you avoid them upfront and assure that you will get a good loan.