From knowing how many houses you can afford to show home sellers that you are a serious bidder, according to Bank Rate, there are several reasons why getting preapproved for a mortgage is a great idea. The preapproval process can be tricky and long, which creates many chances for you to hurt your chances of purchasing your dream home.
If you're considering purchasing a home or are in the process of securing a mortgage preapproval, here are a few things you should never do.
Do Not Quit Your Job
A new job opportunity presented itself and because you'll be making more money, you assume it will help make you more attractive to lenders. Proof of a steady income in your chosen field shows stability and that you can afford the mortgage now and in the future. If you quit your job, and especially leave the job industry you're currently in, the lender will consider you a risk.
Instead, wait until the mortgage has closed before getting a new job. If you cannot wait or lose your job, find a similar job in the same field. This will show lenders you are not only reliable now, but you will also continue to be reliable in the future.
Do Not Co-Sign a Friend or Family Member's Loan
If you have good credit and a steady income, friends or family members might ask you to cosign their car loan, student loan, or mortgage. When you cosign a loan, you make yourself financially responsible for the individual's debt. If the signer defaults, you as the cosigner are legally responsible for the debt.
Unfortunately, even if your friend and family members remain current on their payments, the mortgage company will still consider the debt your debt as well. Depending on the size of the debt, it could push your debt to income ratio into a range that disqualifies you from qualifying for a mortgage.
Instead, hold off on cosigning any loans, or taking on any new debt yourself. This includes purchasing a vehicle or taking on new credit card debt.
Do Not Spend Funds You Set Aside for Your Down Payment or Closing Costs
According to Zillow, the average homeowner can expect to spend anywhere between two and five percent of the purchase price of their home on closing costs. These costs, which include attorney's fees, the cost to appraise the house, and escrow fees, are combined with your down payment. Depending on the type of loan you have and what you can afford, you could pay anywhere from 10 to 20 percent for the down payment as well.
The mortgage company will ask for your bank records at the beginning of the application process. If you spend this money on a family vacation or some new furniture for the house, the mortgage provider might consider this reckless and will deny your loan. Instead, create a separate account for your closing costs and down payment and do not touch it.
Do Not Lie on Your Mortgage Application
From your income to your credit card debt and employment history, you will be asked several questions on your mortgage application. Telling the truth, even if it means you secure a smaller mortgage than you wanted, is important because the mortgage provider will double check this information. If there are inaccuracies or the lender discovers you have lied on the application, it will be immediately denied. This will not only jeopardize you're current ability to secure a mortgage, but it can also make it difficult to apply for one in the future.
When it comes to successfully securing a mortgage pre-approval, there are several things you should never do, including cosigning a loan or lying on the mortgage application. To learn more about what you should do, contact companies such as NRL Mortgage LLC.
Hello, my name is Sigmond Jenner. Welcome. I am here to talk to you all about acquiring personal loans for emergency expenses. Although everyone should have an emergency fund in a savings account, there are many barriers to achieving that goal. In the meantime, you can look into acquiring a loan to cover emergency expenses that may come up. You should be prepared ahead of time, so you can act fast when unexpected financial expenses arise. I will provide information you can use to prepare yourself for this process. Please come back again anytime to learn more about acquiring loans as needed.