If you are applying for a mortgage to purchase a home, you will want to make sure that the process goes smoothly so that you can close on the property successfully. That's why it's important to know these mistakes that you should avoid if possible.
Mistake 1: Not Having A Plan For The Down Payment
One question that is going to be asked when you apply for a mortgage is where you will get the money for the down payment. The lender is hoping to hear some sort of plan on where you'll come up for the cash for closing, which could come from a variety of different places. This includes using money from personal savings, getting it from a relative, borrowing money from an IRA, or some other method. If you do not have a plan in place for your down payment, you may have trouble getting approved for a mortgage because the lender will have concerns.
Mistake 2: Making Big Purchases During The Underwriting Process
Once you have the ball rolling to get a mortgage, you likely have a lot of things you want to purchase before you move into the home. This could include purchasing new furniture, new appliances, home renovation items, or even a new car to take on your new commute to work. Avoid making any big purchase and opening new lines of credit at all costs during the underwriting process. Your credit is going to be checked several times, and if the underwriters see significant changes to your credit, there will be a big red flag put on your account. You do not want to be viewed as a risky borrower when trying to get approved.
Mistake 3: Buying A Home That Needs A Lot Of Work
Many home lenders will look closely at the home inspection and appraisal to see what kind of home you are buying. If you are purchasing a home that needs a lot of work, there is a chance that they will not approve your mortgage. The lender doesn't want you to default on your mortgage and then they get stuck with a home that is in bad shape. They want the home to be livable and easy to sell if they need to. While many basic home repairs are expected, the lender may walk away if something major like foundation repair is needed.
For more information about mortgage loans, contact a local lender.