Buying a home this year? Here’s what to avoid prior to applying for a mortgage:
Home shopping before getting pre-qualified.
This is a common mistake when it comes to the homebuying process. Many first-time buyers make the mistake of shopping around and touring homes before they speak with a lender. Why is this an issue? Getting pre-qualified will let you know how much you can afford to borrow so that you can start shopping within your budget and avoid falling in love with a home that you can’t afford. It can also help you identify and weed out any issues early in the process.
Making big purchases before or during the mortgage process.
The homebuying process is often sparked by another life event, such as getting married or having a baby. You might feel the need to buy new furniture or purchase a new baby-friendly vehicle before or during the mortgage process. However, adding any new debt could offset an important ratio used during the loan process: The debt-to-income ratio. This ratio is critical when determining whether you will be able to make your monthly mortgage payments. We’re not saying that you can’t make these purchases before you start the mortgage process, but it is good to know how they can affect your buying power. During the mortgage process, however, steer clear of any large purchases until you have closed on your loan.
Missing monthly payments
Lenders look closely at your credit and payment history to determine how likely you are to pay them back. Missing a payment could negatively affect your credit, which could cause you to qualify with a higher interest rate, or worse, not qualify at all. If you have recently missed a payment, speak with your lender to see what options you might have to get back on track.
Saving Up Cash for a Downpayment or Closing Costs
You may have been told in the past that “cash is king,” but not the case when it comes to mortgages. Mortgage lenders operate under strict government guidelines that require them to track and document where your cash deposits came from to ensure that the money was not obtained illegally, being loaned to you under the table, or is not being used to launder money for drug or terrorist organizations. This is why it can be tricky when you make large cash deposits into your bank account during the mortgage process unless you can document exactly where it came from.
Ready to get started on the path to homeownership? Apply today!
TowneBank Mortgage NMLS# 512138.
The information contained herein (including but not limited to any description of TowneBank Mortgage, its affiliates and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This article is for informational purposes only. This is not a commitment to lend.
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