Mortgages come with a lot of financial assessment and responsibility. And your primary concern is not to jeopardize your chances of closing on the hom
Mortgages come with a lot of financial assessment and responsibility. And your primary concern is not to jeopardize your chances of closing on the home you want. But many prospective buyers aren’t sure how to avoid mistakes when applying for a mortgage. Since we’re here to help you, we created a list to help you make the best decision. Read on to discover the top 5 things to avoid before applying for a mortgage.
#1 Not paying your bills on time
The first thing to avoid before applying for a mortgage is falling behind on bills. Credit scores are of main interest to lenders. And unpaid bills can take a toll on your reputation, too. Missing bill payments can interfere with your score and trustworthiness.
#2 Maxing out your credit cards
Your credit score is influenced by your credit cards, too. This means that if you exceed your limit or use the card too often, your score will decrease significantly. The credit utilization ratio is yet another factor that influences your credit score. The best ratio you should have is one below 30%. Prospective home buyers must do their best to keep the ratio as low as possible.
#3 Changing your job
A common mistake before applying for a mortgage is changing your job. Lenders will verify your employment history, meaning that the longer you are at your current job, the higher the chances you’ll have to close a deal. A lender will need reassurance you have a stable source of income to pay your debt monthly. Hence, it might be a good idea to avoid switching jobs shortly before signing your mortgage deal.
#4 Getting into too much debt
Another thing to avoid before applying for mortgages is racking up debt. Having extra debt before applying for mortgages doesn’t make sense. And it can deem you ineligible for a loan! So, it is best to deal with your existing debts before signing up for a mortgage. Otherwise, you’ll be ranked as a risky borrower.
#5 Not checking your loved one’s credit score
Marrying with someone with bad credit and trying to get mortgages might not be a smart move as you think. When you’re married, both partners are assessed for their credit scores. This means that your financial histories will be checked thoroughly, and both your credit scores will determine whether you can get a mortgage.
The bottom line
Applying for a mortgage is all about attention to detail. There are some top things to avoid before getting a mortgage, including the ones we shared above. Sometimes it can be a good idea to discuss with a financial advisor. In this way, you’ll receive accurate information on which steps to take to improve your credit score and achieve the mortgage you want.