Ten Problems to Avoid During the Mortgage Application Process

Securing a mortgage represents a significant milestone on your path to home ownership. Avoiding common pitfalls during the mortgage application process is vital to ensure a smooth and successful approval experience. As a mortgage professional, my goal is to share invaluable insights regarding the critical missteps to steer clear of when applying for a mortgage.

Top 10 Things to Avoid When You Apply for a Mortgage

1. Don’t Neglect Your Credit Score: Strive to maintain a healthy credit score to secure favorable mortgage terms. Your credit score wields substantial influence in determining your loan eligibility and interest rates. It’s imperative to abstain from making significant credit-related decisions, such as opening new credit accounts or missing payments, both before and during the mortgage application process. There are many resources online to help you improve and protect your credit score.
   
2. Not Being Clear Regarding What You Can Afford: Determining how much house you can afford is crucial to ensure that your mortgage payments align with your financial situation, preventing you from becoming financially strained or “house poor” and allowing you to maintain your lifestyle and financial goals.
3. Skipping Pre-Approval: Ignoring the pre-approval opportunity can lead to frustration and delays in your homebuying journey. Pre-approval offers a clear picture of your budget and positions you as a committed homebuyer. It’s a good tool also to help you stay focused on homes that fall within your determined price range.
4. Don’t Skimp on Research: Although the law offers specific safeguards for consumers, the most effective means to safeguard your interests is to educate yourself about the mortgage procedure and do thorough research about anything you find perplexing.
5. Incomplete Documentation: The provision of accurate and complete documentation is absolutely crucial. Delays in the approval process can occur if you fail to furnish the any requested documents promptly. We always recommend that our borrowers carefully review all paperwork before submission to be sure it’s complete and accurate.
6. Changes to your Income or Employment: Mortgage lenders evaluate the stability of your income when assessing your eligibility. Introducing changes to your job or income sources during the application process can raise concerns and potentially jeopardize your approval. Refrain from making significant career changes until after securing your mortgage if you can. Explain any possible employment or income changes to your Thompson Kane loan officer before making the changes if possible to find out if and what you might do to avoid problems with your financing.
7. Don’t Ignore Debt-to-Income Ratio (DTI): Your debt-to-income ratio (DTI) provides a significant determinant during the approval process. Expanding your debt portfolio or increasing existing debts before finalizing your mortgage can affect your mortgage eligibility and interest rates negatively.
8. Forgetting to include Closing Costs in Your Budget: Closing costs can be a significant expense that should be part of your grand plan. Failing to account for these expenses can catch a borrower off guard and place undue strain on finances. Make sure your lender provides you with a comprehensive estimate of all the anticipated closing costs so you can plan your finances accordingly.
9. Large Purchases Before Closing: Prior to closing on your mortgage, avoid significant expenditures like purchasing a new vehicle or furniture. Large purchases and new debt can have repercussions on your credit score and debt-to-income ratio, potentially leading to a loan denial.
10. Failing to Communicate: Open and timely communication with your lender is essential. Should you encounter any changes or obstacles during the process, be sure to keep your lender informed so they can address potential issues effectively.

Avoid these common mistakes, and you’ll pave the way for a smooth mortgage approval process. Thompson Kane is here to guide you through every step and ensure that your journey to homeownership is as seamless and stress-free as possible. Feel free to reach out if you have any questions or are ready to start the application process.