Avoid these mortgage mistakes that could impact approval. Common pitfalls include neglecting your credit score, changing jobs pre-application, making large purchases before closing, skipping pre-approval, and forgetting closing costs. These errors can lead to loan denial. Maintain a good credit history, stable income, and manageable debt. Get pre-approved and factor in closing costs for a smoother home buying process.
So, let’s talk about what actually gets in the way of mortgage approval and how to avoid these pitfalls.
1. Ignoring Your Credit Score
Lenders don’t just glance at your credit score, they study it. If it’s too low, your chances of approval shrink fast. The common mistakes people make?
- Not checking their credit report. Sometimes errors pop up that can drag your score down.
- Late payments. Even a single missed payment can make a big dent.
- Racking up debt. High credit card balances make lenders nervous.
Before applying, get your free credit report from Annual Credit Report.com and clean up anything that’s hurting your score.
2. Changing Jobs Right Before Applying
Stable income is a big deal. If you switch jobs right before applying, lenders may see you as risky.
They want:
- A steady, two-year work history
- Consistent earnings
- Predictability
If a career change is in the works, hold off on buying a home until your income stabilizes.
3. Making Big Purchases Before Closing
So, your offer gets accepted, and you’re pumped. What do most people do? Buy furniture, a car, or even open new credit lines.
That’s a quick way to mess things up. Lenders check your debt-to-income ratio again before closing. If you’ve added debt, they can deny the loan at the last second.
Want to play it safe? Wait until after closing.
4. Not Getting Pre-Approved
Shopping for a house without pre-approval is like showing up to an auction without knowing your budget. It’s pointless.
Pre-approval:
- Shows sellers you’re serious
- Gives you a clear budget
- Helps you avoid heartbreak (finding a home you can’t afford)
Before you start house hunting, talk to a lender and get pre-approved. Need a guide? Check out our real estate blog for expert insights.
5. Forgetting About Closing Costs
Many homebuyers only think about the down payment, but closing costs can sneak up on you fast.
They typically run between 2% and 5% of the home price. That’s thousands of dollars you need on hand.
Here’s what closing costs include:
- Lender fees
- Appraisal costs
- Home inspection
- Property taxes
- Title insurance
Don’t underestimate this. Make sure you budget accordingly.
FAQs
Can I buy a home with bad credit?
It’s tough, but possible. Some lenders work with lower credit scores, but you’ll likely get higher interest rates. A smart move is improving your score before applying.
How much should I save for a down payment?
Ideally, 20% to avoid private mortgage insurance (PMI). But there are options with lower down payments, some as low as 3%.
What’s the best way to improve my chances of mortgage approval?
Keep your credit score high, maintain stable income, avoid unnecessary debt, and get pre-approved before shopping for a home.
There are still more mortgage mistakes people make without realizing it. Check out our latest posts to stay ahead of the game.