Many homebuyers do everything in their power to increase their odds of mortgage approval. After all, in the absence of a good mortgage, homeownership would be well outside the reach of millions of Americans. Unfortunately, without even realizing it, a fair number of home loan applicants make a host of bad decisions that result in their applications being rejected and their dreams of homeownership having to be placed on hold.
Applying For Loans You Can’t Reasonably Afford
No matter how important homeownership is to you, it shouldn’t come at the cost of perpetually strained finances. As such, you’d do well to avoid applying for loans with excessive interest rates and/or exorbitant monthly payments. If a sizable majority of your income is put into mortgage payments, your quality of life is likely to suffer – even if you do manage to land your dream home.
Unsurprisingly, people who have been rejected by multiple lenders sometimes feel as if they have no choice but to settle for loans they can’t reasonably afford. The way they see it, this is their only path to homeownership. While this rationale is somewhat understandable, taking on an unaffordable home loan stands to drain your finances, destroy your credit and get you evicted from your new house. So, no matter how tempted you are to commit to an unreasonable loan, make sure to stop yourself and take some time to improve your credit. Virginians in the market for new homes are sure to appreciate the attractive options they’ll find when searching for mortgage Fairfax, VA.
Failing to Take Long-Term Expenses into Account
Before signing on to a mortgage loan, make a list of the various expenses associated with owning a home and calculate their cumulative cost. After all, your monthly mortgage payments are by no means the only regular expenses for which you’ll be responsible. Home insurance, utilities and property taxes are just a few of the factors you’ll need to consider when tallying up costs. So, even if you’re able to comfortably afford your mortgage payments, other expenses may put you over the edge.
Failing to Pay Down Debt
Having large amounts of outstanding debt stands to severely limit your mortgage loan options and diminish your odds of loan approval. Unsurprisingly, if a lender sees that you have copious unpaid debt, they’re likely to deem you a high-risk borrower and reject your application. Additionally, even if they don’t outright reject it, they’re unlikely to offer you terms that are as flexible as those offered to low-risk borrowers.
So, before proceeding to submit any applications, put a dent in your outstanding debt. The less debt you have going into the process, the better off you’ll be in the long run. Furthermore, if it’s possible to pay off your existing debt entirely, make a point of doing so. This will illustrate to lenders that you have satisfactory financial resources and a strong sense of responsibility.
For good measure, you should abstain from making large purchases on credit while your application is being considered. If you simply can’t put off a certain purchase, either pay with cash or approach a trusted friend or family member about a short-term loan.
Losing Your Primary Source of Income
Having a steady source of income – though not necessarily a job – is practically expected of mortgage loan applicants. As such, losing your income in advance of submitting your application or during the review process can really throw a wrench in the works. Furthermore, if your job is your primary source of income, it’s generally a good idea to avoid quitting while your application is being considered. By extension, some lenders are hesitant to approve loans for people who start new jobs right before submitting their applications.
Every homebuyer would do well to approach the mortgage loan application process with seriousness. Since loan rejection stands to dash your dreams of homeownership, it’s in your best interest to be thorough and take a number of preparatory steps in advance of submitting any mortgage applications. Furthermore, you should be mindful of certain mistakes that stand to hinder your odds of loan approval. Luckily, as long as you know which factors to consider, setting yourself up for success shouldn’t prove difficult. In the interest of having your mortgage loan approved, take care to avoid the behaviors discussed above.