Planning and research are the first two steps you need to take if you anticipate buying a house with the help of a home loan in the near future. And there is not better time to start than now.
Every financial move you make can make an impact on your mortgage application. You wouldn’t want to sabotage your chances of a home loan approval because of past money mistakes.
To help you with your Mortgage Loans Arlington application, remember not to make the following financial mistakes.
High Credit Utilization Rate
Mortgage lenders will check how much debt you already have. If you have more than 30% utilization rate, this can hurt your chance of getting approved for a mortgage as lenders will take this as a red flag telling them you can no longer handle more debts. Pay off your debts regularly, and on time until you reach a 30% utilization rate, you’ll have a better chance of getting an approval.
Job-Hopping Before The Home Loan Deal Closes
Lenders will make sure you’re financially stable before writing you a mortgage. Changing jobs often won’t give you much of a solid employment background as this can mean there is a chance you can’t pay off the loan on time. You will also need to provide copies of your two years worth of bank statements, pay stubs and federal tax returns, among other financial documents.
Delinquencies On Your Credit Report
Delinquency refers to an unpaid debt. Remember that all of your current debts and past credits will reflect on your credit report. Thankfully, you can still clean up your credit report and prevent future delinquencies from happening. Pay your dues on time and talk to your creditors to work out installment plans. This will help you pay off your entire debt without breaking your bank.
Recommended Read: Delinquency vs. Default: What’s the Difference?
Marrying Someone With A Poor Credit History And A Bad Credit Score
Sad but true, the love of your life’s credit report and FICO score can play a significant role in your mortgage application. We know that most couples choose to buy a house after tying the knot. If you’re applying for a mortgage together, your lender will check both of your financial histories, credit score and report. It would be best to help your future spouse improve their FICO score and history and pay off any major debts before applying for a mortgage.
Making Large Deposits Before Applying For Mortgage
It is true that some mortgage programs do allow down payment gifts. However, there are rules when it comes to such down payments. For one, you need to make sure to make deposit three to six months before your home loan application. Also, you need to document the money deposited in your account in details properly. There are other rules to follow when accepting down payment gifts, so make sure to look it up before accepting one and applying for a home loan.
Good Read: The Rules for Documenting Mortgage Down Payment Gifts
Keep these five financial mistakes in mind and avoid them at all cost before you even apply for a mortgage. Keep your chances high of getting a home loan and make smart moves when it comes to your finances.