Getting a mortgage takes a lot of effort, and when it finally pays off, you heave a sigh of relief. Whether you are buying a new house or moving to a new neighborhood, getting a mortgage approval can be a nerve-wracking wait. Many homeowners tend to believe that approval means you are good to go.
However, there are more processes that your mortgage insurance provider, like Burlington Mortgage Renewal, will want to go through. They will want to run a final credit report to ensure that nothing has changed with your credit usage and score, which will affect your qualifying for a mortgage. You will find more here about these intricate details.
This article lists ten mistakes to avoid if you don’t want to jeopardize your mortgage approval status. Here we go.
1. Providing inaccurate or unnecessary information
There’s no point in beefing up your mortgage application. You have to be completely honest with your financial details if you seek a mortgage professional’s help. Unless they know your proper details, they will not be able to guide you the right way. You need to provide all the info about your:
- Financial status
- Consumer proposal
2. Avoiding a down payment
Your down payment is a critical part of your homeownership. Down payment does two things for you when you are buying a home: It reduces your overall financial requirements and increases the amount of equity right. When you make a down payment, it also shows you are serious about the investment.
3. Not getting a pre-approval
There are so many influencing factors in a mortgage. Unknown changes in your credit reports, rate changes, and mortgage product updates are determining factors that influence your qualifying for mortgage approval. Therefore, you cannot simply assume that you will get a mortgage without getting pre-approval. Also, remember that most banks consider pre-approval to be valid for only four months.
4. Avoiding credit missteps
It is important to maintain the status of your credit score and your current debt during your mortgage approval. Avoid making mistakes like overriding your credit card limit or missing any payment dues. Such mistakes will portray you in a bad light, and your lender will doubt your ability to repay the mortgage. Having unused available credit and cards open with a good history of repayment is an advantage for you.
5. Applying for other loans
Making the mistake of applying for other loans when you are thick amid a mortgage approval can cost you dearly. It can topple your credit ratings and jeopardize your qualifications to get a mortgage. We urge you to postpone any big expenses like buying a new car until after your mortgage is finalized. You should also know that co-signing for new loans can be as detrimental as applying for loans. Such details will show up on your credit report and become a liability for your mortgage approval.
Having heavy credit card debts
Misusing your lines of credit can increase the risk of debt overload. Most people make the mistake of buying expensive things when there’s an ongoing mortgage approval process. Such mistakes will push the debt servicing ratio and cripple their ability to refinance their debts. Therefore, it is imperative to have your finances under control if you want a mortgage.
7. Sporting large deposits
As much as debts are debilitating, having large money deposits is not ideal, especially not at this time. When purchasing a property, your bank will generate a three-month statement of all your bank account details. This statement will highlight any deposit outside of your pension or monthly income, which will require a proper explanation with a paper trail.
It is wise to reach out to professionals who will guide you with the dos and dont’s when you are in the midst of a mortgage application. Always ensure that you do things the right way to succeed with your mortgage process and make your efforts worthwhile.