If you’ve done your homework, you know how important it is to get your financial house in order before applying for your mortgage. But in many ways, that’s just the first step.
A lot of buyers let out a big sigh of relief once they’ve gotten through their application, and end up making some mistakes that can cost them time, money and headache. In some cases, a misstep could even cost them their loan approval.
Knowledge is power and that’s certainly true when it comes to the mortgage process. Here are three things to avoid as you make your way toward final loan approval:
Making a major purchase
You may see a great deal on furniture that you’ll need for your new house. Or, maybe you decide you would like to get a boat or replace a vehicle. The smart thing to do is to wait until after your loan has closed. Using up your cash reserves could threaten your ability to pay your closing costs and may send the wrong signal to your lender. Putting the purchase on a credit card or taking out new financing to make the purchase will impact your debt-to-income ratio, which could even put your loan at risk. While it can be tempting when you see a great deal, it’s much better to wait it out and not threaten your approval.
Getting just one loan estimate
You probably wouldn’t buy a vehicle without comparing terms among multiple lenders. The same goes with your home purchase. You may have a lender that you feel most comfortable with and in the end, that may be where you get your mortgage. But, you should shop around and speak to more than one lender to be sure you’re getting the most competitive interest rates and the best loan terms. It’s impossible to tell if you have nothing to compare. When the rates and terms are very close, you can take into account how comfortable you feel with the customer service you’re receiving.
Not using a lender experienced with your area
In a lot of cases, this is going to mean working with a local lender who is experienced with your market. They often are your best bet to safely get you to the closing table. But, if you really prefer a national, online lender because they offer you the best terms, just be sure they have a loan officer who is experienced with your market so you don’t run into any hiccups before you close. Ask how many loans they’ve closed in your city and whether you will have access throughout the process with someone experienced in your market.
The bottom line
When you’re ready to apply for a mortgage, it’s helpful to know what common missteps others have made to avoid making them yourself. Having this knowledge upfront can help to ensure your mortgage application moves along smoothly and you’re soon getting the keys to your new home.
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