Top 10 Mortgage Mistakes To Avoid

Not Knowing What You Can Afford 

One common mortgage mistake that borrowers often make is not figuring out how much they can afford before beginning the property search. Before you even begin to think about looking at MLS for houses, you should get a mortgage pre-approval. This way your real estate agent will know exactly what houses to focus on in the search process. Once you know how much home you can afford based on your salary and assets, then you can properly assess the situation. 

Limited Employment History

Attempting to get a mortgage with less than two years of consecutive employment in the same occupation or field, is not wise. This is because you must prove to mortgage lenders that you will be able to continue to make the money you are currently making to obtain a mortgage loan. Also, avoid switching jobs prior to the application unless it is a significant pay raise, in the same field. 

No Assent or Rental History

Do not even attempt to get a mortgage without a documented 12-month housing history or assets that cover at least two months of your potential mortgage payment. Lenders want to know that you paid your rent on time and have enough in your bank account to cover future payments.

Look around for mortgage rates

Many people are intimidated by the idea of shopping around with multiple lenders. This makes sense, as the mortgage application process can be gruelling with each inquiry having the potential to affect your credit score. 

There is a massive advantage of shopping around with multiple lenders when seeking a mortgage. Shopping around is something you will do once, that will benefit you for years to come. Even a small percent lower on the interest rate can lead to thousands in savings. 

This is exactly why you should consider using a mortgage broker, like one from Dominion Lending Centres NasaKasa, as they can do the shopping for you. This way you don’t have to be intimidated by the process, as an expert in this area will be doing it all for you on your behalf. They also only have to pull your credit score once, avoiding having to pull it up multiple times and risking hurting your credit score. 

Do Not Buy New Credit Cards

Getting new credit cards or making excessive charges on existing credit lines before and during the loan application process can hurt your credit score significantly and increase your debt load, which could lead to disqualification.

Filing Bankruptcy or Being Foreclosed Upon

Avoid bankruptcy and foreclosure – period.  Either could prevent you from getting a mortgage or several years – up to seven. Also, avoid paying your mortgage payments late – even if your credit score is good enough to meet minimum guidelines, late mortgage payments can mean the difference between disqualification and approval.

Not Locking Your Mortgage Rate

If you fail or forget to lock the interest rate on your mortgage, it could go up – a lot. You have the choice to lock or float your mortgage rate when you apply for a mortgage but make sure you understand both and keep an eye out on interest rat4ws before and during the home application process.

Listing Your Property Before A Refinance 

Listing your property on MLS and then attempting to refinance your mortgage on that same property within six months, or longer is not a wise idea. Lenders don’t love the idea of giving you a loan on something you do not actually want, or tried to get rid of unsuccessfully just months before.

Having Major Derogatory Accounts On Your Credit Report 

Regularly review your credit report several months before you begin the mortgage process to make sure there are no surprises. 

A low credit score can lead to a much higher mortgage rate and in worse case scenarios, even disqualification. Also, try to avoid credit counselling. Even if it does not lower your credit score, many banks won’t lend to borrowers who have used these services in the recent past.

Applying Without A Solid Credit History

You may not get approved for a mortgage if you fail to establish your credit history. You generally need at least three credit tradelines that show up on your credit report with a minimum two-year history on each to qualify for a mortgage.

Dominion Lending Centres NasaKasa

Contact us today so you can avoid potential mistakes that will keep you from getting a mortgage and thus the house of your dreams. We will hold your hand through the entire process and get you approved. Let us work for you by calling 905.997.7001 or emailing mtg@nasakas.com.

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