Thinking of buying a house this year? Avoid these common mistakes
Buying a house this year? Here’s what to avoid before applying for a mortgage:
Home shopping before being prequalified.
This is a common mistake when it comes to the home buying process. Many first-time home buyers make the mistake of shopping around and viewing homes before speaking with a lender. Why is this a problem? Being prequalified will let you know how much you can afford to borrow so you can start shopping within your budget and avoid falling in love with a home you can’t afford. It can also help you identify and eliminate any issues early in the process.
Make large purchases before or during the mortgage process.
The home buying process is often triggered by another life event, such as getting married or having a baby. You might feel the need to buy new furniture or buy a new baby-friendly vehicle before or during the mortgage process. However, adding any new debt could offset an important ratio used during the loan process: the debt-to-income ratio. This ratio is essential in determining whether you will be able to make your monthly mortgage payments. We’re not saying you can’t make these purchases before you start the mortgage process, but it’s good to know how they can affect your buying power. During the mortgage process, however, avoid any major purchases until you have finalized your loan.
Missing monthly payments
Lenders carefully review your credit and payment history to determine the likelihood of you paying them back. Missing a payment could negatively affect your credit, which could cause you to qualify with a higher interest rate, or worse, not qualify at all. If you recently missed a payment, talk with your lender to see what options you might have to get back on track.
Save money for a down payment or closing costs
You may have been told in the past that “cash is king”, but that’s not the case when it comes to mortgages. Mortgage lenders operate under strict government guidelines that require them to track and document the source of your cash deposits to ensure the money was not obtained illegally, loaned to you under the table or that it is not used to launder money for drugs or terrorism. organizations. That’s why it can be tricky to make large cash deposits into your bank account during the mortgage process, unless you can document exactly where it came from.
Ready to start on the path to home ownership? Apply today!
TowneBank Mortgage NMLS #512138.
The information contained herein (including, but not limited to, any description of TowneBank Mortgage, its affiliates and its loan programs and products, eligibility criteria, interest rates, fees and all other loan terms) are subject to change without notice. This article is for informational purposes only. It is not a commitment to lend.
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