Owning a home is probably the biggest investment most people ever make in their lifetime. Property purchase for majority common wage earners depends on the home loan, obtaining which requires a few efforts on the part of the applicant. Following are a few common mistakes that one must avoid to prevent adverse affect on approval of mortgage.
Lending institutions need to be sure of your financial credibility before they decide upon approving your loan application. Your income is not the only factor influencing their decision as they take into account the security as well. Those who change their jobs frequently are taken as risk by the lenders as they are more likely to default on the loan due to unstable income. As a result, their chances of qualifying for financing are less. On the contrary, those who have been working for the same firm for approximately more than two years hold the best chances of loan approval. That is why; try your best to fulfill lender’s requirements as close as possible.
When you apply for finance, lending institutions consider your credit report to find out how seriously you take your financial liabilities. Even a single missed or late payment can hurt your credit score as well as your credit report, interrupting loan approval. Such mistakes might seem to be small but are hard to correct and can have major consequences in the long run. To avoid them, make sure to schedule your pending installments and repay them on time.
Most people make the mistake of applying for another loan after filing their application for finance. This is certainly not a wise move since your debt-to-income ratio and credit score is affected when you take another debt after applying for home finance, further causing a negative impact on your home loan approval. However, other sources like credit cards serve as a better option than applying for another debt in case you are in need of money. But, be sure of repaying timely outstanding balance.
Lenders evaluate your credit report to decide upon the estimated interest rate that you qualify for. When you get mortgage quotes from different lenders, your credit score is not damaged for thirty days post the check. It simply means that if you get quotes within a weak or a couple of days, your credit rating would not be affected. On the contrary, your credit score might get seriously harmed if you take more than a month or two. In such a case, the chances of rejection of loan application are more. The ideal way to escape this problem is to shop around for home loan as rapid as possible.
Applying for mortgage at the time of having insufficient funds for making down payment is another mistake commonly made by many people. Less funds for down payment means you appear as more risk to lenders due to which they do not hesitate to reject your application. Many lenders set a limit on down payment, so make sure to meet that maximum to secure easy loan approval. Avoid these blunders and increase your chances of qualifying for home financing.
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