A lot of potential homebuyers are unable to get the house they want because their mortgage application was denied by the bank or by the lending institution. Having a mortgage denied is due to certain mistakes committed by loan applicants. If you are in the process of applying for a mortgage, you must first be familiar with the common mortgage mistakes to avoid getting denied. Here are a few mortgage blunders.
Applying For Mortgage Without Getting Finances In Order
If you apply for a loan without getting your finance in order, your application might be denied. Before you even consider submitting your loan application form, it is crucial to know your current financial status. In addition, you have to make sure that your finances are looking good. Knowing what your current position is- financially, will help you choose the right mortgage package and rates. Here are a few tips to get your finances in order:
- Get an accurate assessment of your financial position. This includes getting a copy of your Income and Expenditure worksheet as well the list of your Assets and Liabilities. The information contained in these documents will let you know what you can afford.
- Make sure that you finances look good. This means that you must pay off any outstanding debt and remove liabilities if possible. Doing so will help improve your financial position.
- Obtain the most current copy of your credit report.
Failure To Fix Credit Score
This is a very common mortgage blunder that leads to a denied mortgage. To avoid this mistake, you must first obtain a copy of your credit report. You must check it for any errors or negative entries. If you fail to challenge the errors, it will have a negative effect on your score and could result to a denied mortgage or higher rates. As a tip, you must obtain a copy of your credit report six months prior to applying for mortgage. This will enable you to fix any problems in your report and improve your score.
Failure To Compare Lenders
You might be under the assumption that lending institutions are required by law to charge the same mortgage rates and fees for appraisals and credit reports. You have to understand though that these fees are negotiable and it may vary from one lender to another. You can save a lot of money if you compare lenders and their rates and fees. This may seem like a very time-consuming task but it is worth it.
Not Paying Attention To Mortgage Rates
Mortgage rates are like stock prices. They change multiple times throughout the day. With that said, you need to monitor mortgage rates and consult various lending institutions. This will help you get the best possible deal. Remember though that when comparing rates, you need to make sure that you are comparing the exact same mortgage loan. When you get the right mortgage rate that suits your current financial position, your application will be less likely denied.