Getting a mortgage is an important first step once you’ve decided to take the plunge into homeownership. Especially if this is your first home though, there are some pitfalls that you may not be aware of.
Here are a few common mistakes to avoid when you are applying for a mortgage.
Not working with a mortgage broker
Perhaps you have a financial institution or bank where you have a savings or investment account. Chances are at some point, they are going to send you an offer for a mortgage. While many people work directly with their bank to get a mortgage, they are missing out on the expertise and guidance of a professional mortgage broker if they do.
A mortgage broker will work to find you the best rates and terms for your situation. And they work with all the major banks – so if you still want to get your mortgage from your financial institution, you can – but you’ll have the professional advice of a mortgage broker too.
When you apply for your mortgage, the lender is going to require certain financial information from you in order to make the approval. If there are errors or there is information missing, it can cause unnecessary delays or even result in your application being denied.
This is one of the reasons why it is so beneficial to work with an experienced mortgage broker who can walk you through the process. Part of your broker’s job is to take care of all the paperwork and ensure that everything is complete and correct before submitting your application to the lender. They will also assist you in collecting the information you need such as credit score, credit history, proof of income, etc.
Putting too much attention on the interest rate
Many borrowers when they are applying for a mortgage focus only on trying to secure the lowest interest rate. And although your mortgage broker will work hard to find you the best interest rate possible, it is not the only factor to consider when applying for a mortgage.
For example, you may find a lender who is willing to offer a super low-interest rate, but the mortgage itself may have very restrictive terms, stringent qualification requirements, or excessively high penalties should you need to break your mortgage in the future. Your mortgage broker will carefully review the terms of any potential mortgage and make sure you understand them. They will also recommend what they think will be ultimately in your best interests.
Making major changes to your financial situation
In the months just prior to and following your mortgage, you should avoid making any significant changes to your financial situation. This includes changing employers (even if you will be making more money in the new job) and taking out any new large loans.
Lenders want to see that you have a stable credit history, and a major financial move too close to your mortgage application can impact their decision.
Contact me today
If you are ready to apply for a mortgage, I can help you avoid these and other mistakes. Contact me today to learn how I can help.