Getting a home loan can be a challenging process, and a finicky one. Qualifying can be challenging and once a buyer gets approved, it can be surprisingly easy to derail the process. Here are some mistakes to be avoided:
Not Pre-Checking Credit
Once a borrower makes his application for a mortgage, his fate is
largely sealed. One way to increase the chance of qualifying for a home
loan is for a borrower to check his credit before applying. That way, he
can address any issues before they become problems for the lender.
Lenders judge borrowers on their ability to repay the loan. While a
borrower’s credit rating is a good indicator of past performance, his
current job and income provides some assurances that he can make his
Changing jobs or losing a job interrupts the income, and can make a lender decide not to lend to that borrower.
Taking On New Debt
New debt can derail a mortgage in two ways. First, adding debt can
lower credit scores from the inquiry that comes as well as worry
lenders. Second, new debt increases monthly payments, which lower the
amount that a borrower can take out on a home loan due to the
limitations imposed by the lender’s debt to income ratio.
Fudging The Numbers
Some borrowers might be tempted to tweak some of the numbers on their
mortgage applications to make them more attractive to the lender, but
lying on a mortgage application is a very bad idea.
First, lenders investigate what gets entered and they’re likely to
catch it. Second, it is also fraud and could leave the borrower subject
In general, people considering a home loan should remember the
Hippocratic Oath that doctors take. Its message — do no harm — is a good
rule of thumb for applying for a mortgage.
Applicants that keep their financial status the same throughout the
process without making any changes are more likely to emerge at the end
with their new home and their original loan.