Mortgages are extremely complex by nature and there are plenty of common mistakes you may be overlooking throughout the mortgage application process. In order to have a successful lending application, knowing and understanding such errors can help you better prepare yourself.
That said, it’s important that you know what to look for in order to make an informed choice regarding your mortgage loan options.
In this article, we are going to review five common mistakes that homeowners-to-be often make when applying for mortgages and share tips on how you can avoid these errors.
Avoiding The Pre-Approval Letter
One of the common mistakes I see is avoid getting pre-approved first. Homeowners should look to secure a mortgage pre-approval letter prior to beginning their search for properties. This process will grant them the opportunity to discover how much money they can get approved for, which will allow them to focus only on homes within their price range. In addition to this, it can also play a role in speeding up the process during final approval and its often a perfect way to secure a rate in a rising rate environment.
Its also worth mentioning that having a pre-approval letter often will give you an advantage over other buyers, who will not have this letter to present to sellers.
Not Knowing Your Down Payment Options
Speak to your mortgage professional to find out what can be used as an acceptable down payment and what are the other sources you can increase your down payment. Often the higher the down payment, the higher purchase price you can offer.
Missing Key Documents
To qualify for a mortgage, undoubtedly lenders require a lot of information from you. If you want to have this process as smooth as it can be, you should be as cooperative as possible and have all the correct paperwork and documents ready for presentation, which should all be accurate, detailed, legible and fully complete.
If this paperwork does not satisfy the conditions set by the lender, then you could expect delay in processing your application by the lender or the borrower’s loan application could get refused altogether.
Including any errors in these documents may also negatively affect your chances of receiving a mortgage approval, as false or misleading information can be considered fraudulent by lenders.
Failing To Check Your Credit Score Before Applying For A Mortgage
To increase your chances of getting a mortgage, you need to ensure that your credit score is above the minimum number required and ideally on the higher side.
If your credit score is low, then it would be wise to delay your mortgage application until you can increase it.
Ignoring To Read The Terms And Conditions
Before signing a mortgage contract, read the fine print carefully. The lender’s terms and conditions should be clearly outlined in the document (including interest rate and repayment period).
It is also important that you read the fine print to become fully aware of your rights and responsibilities as a borrower, because knowing this information will help you avoid future financial or legal difficulties.
Ask the Experts
We hope that you’ve gained some valuable insights from this article and will be better prepared for your next mortgage loan.
If you are interested in finding out more about what’s available and how to choose an option, contact our Orchid Financing team and discover that there is something for everyone.
Reach out to schedule a free consultation today!