Mistakes to Avoid When Applying for a Home Loan

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Applying for a Home Loan

Although some people are able to purchase homes in cash, the vast majority of homeowners have no choice but to go the mortgage route. Since homeownership is virtually impossible without a manageable mortgage, it behooves all prospective homebuyers to regard the home loan application process with due importance. Unfortunately, many loan seekers wind up hurting their chances of approval without even realizing it. So, if you’ll soon be applying for a home loan, make sure to avoid the following blunders.

Not Paying Down Existing Debt 

It should come as no surprise that many mortgage lenders are hesitant to take chances on applicants with poor credit and copious debt. After all, if an applicant is having trouble paying down existing debt, how much of a priority is keeping up with mortgage payments going to be for them? Needless to say, going into the application process with a mountain of outstanding debt isn’t going to do you any favors. 

With this in mind, make sure to get a handle on existing debt before proceeding to submit any mortgage applications. This may mean waiting a bit longer to own a home than you’d like, but it can be a boon to both your credit and your chances of loan approval. So, if you’re hoping to start submitting mortgage applications in the near future, there’s no time like the present to start making headway into outstanding debt. 

It’s also strongly advised that you abstain from accumulating additional debt while the review process is underway. So, if you absolutely must make a large purchase during this time, try to avoid doing so on credit. If you don’t have enough cash to make such a purchase, consider getting a short-term loan from a trusted friend or family member.  

Additionally, if you’re afraid that waiting a while to submit a mortgage application means that all your top home choices will be bought up, try to set your mind at ease. Depending on your locale, homes that suit your needs are always likely to be on the market. For example, Floridians on the hunt for real estate in Sarasota will find no shortage of attractive Sarasota homes for sale.   

Applying for Loans You Can’t Comfortably Afford 

While there’s nothing wrong with aspiring to own a home, your desire for homeownership shouldn’t prompt you to apply for loans you’re unable to comfortably afford. If you’re approved for such a loan, you’re liable to find yourself unable to afford much else besides your monthly mortgage payments. (Keep in mind that you’ll also be paying for homeowners insurance.) Furthermore, if the payments are so high that you’re unable to keep up with them, you may wind up having your home seized and your credit severely damaged.    

Quitting Your Job 

Although we live in a culture that celebrates overwork, very few members of the workforce genuinely like what they do for a living. Furthermore, there are a plethora of understandable reasons why people quit their jobs. So, if you’re legitimately unhappy with your current job, seeking employment elsewhere may ultimately be in your best interest. After all, no one should be expected to remain in a position where they’re exploited, unappreciated, or worse

That being said, quitting your job while you have one or more mortgage applications under review isn’t a very good idea. When it comes to loans of this size, applicants who lack a regular source of income tend to give lenders pause. So, unless you’re being abused or harassed in the workplace or your job situation has become absolutely unsalvageable, make an effort to remain employed throughout the application process. If you’re still keen on quitting after the process has been completed, you should do what’s best for you.  

Given how expensive homes are, there’s little wonder as to why the majority of homeowners have to get mortgages. In the absence of a manageable mortgage, homeownership is a dream that most adults would never be able to realize. As such, when applying for a home loan, it’s in your best interest to make yourself an attractive applicant. Fortunately, getting lenders to view you in a favorable light isn’t nearly as daunting as you may think. Anyone looking to maximize their chances of home loan approval should steer clear of the missteps discussed above.  

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