The Top Two Worst Mistakes People Make Applying for a Mortgage

The Top Two Worst Mistakes People Make Applying for a Mortgage

As kids we got told what NOT to do all the time. “Don’t eat sugar before bed,” “don’t play video games until you finish your homework.” The list goes on. Once we become adults we think we are free and no one can tell us what we can’t do anymore! Unfortunately, this is not always the case. Especially when it comes to the biggest financial decision in your life: buying your first house.

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I’m sure you have heard horror stories of people going through the most stressful time during their home buying process. This is probably due to not working with the right people and not being properly informed. Home Financial Group prides itself on educating our clients as well as helping them every step of the way.

Although there are plenty of situations to avoid when applying for a mortgage, we want to inform our readers about the common mistakes people make when applying for a mortgage and how to avoid them:

1. Make a major purchase like furniture, appliances, jewelry, vehicles or vacations

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Why?

After the 2008 housing bust, lending standards have become a lot more conservative. There are certain ratios that borrowers have to meet if they want to get approved for a mortgage. The most common is the Debt to Income Ratio or DTI. This ratio shows how much debt you have relative to income.

It all depends on the loan program, but the DTI usually can’t exceed 43%.

Making a major purchase prior to closing on your home could dramatically affect everything from monthly payments, to interest rates or even prevent you from qualifying for your mortgage! Even though you were previously approved, this is a surprise nobody wants on their closing day.

Save the major purchases for after your closing day!

2. Change or quit your job

Why?

Maybe your boss has scolded you more than once this week and you just want to take the leap and quit! Hold on a sec, it is worth waiting to tell off your boss until after you close on your home.

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Although you might be approved for a mortgage, if you quit or change jobs in the middle of the process, prior to closing, it could dramatically affect your chances of closing on time. Although there are different scenarios such as;

“You change to a higher paying job and have a month’s worth of pay stubs that evidence your income and employment.”

If the first month of working at your new job is completed prior to the date your purchase contract ends, then it should not affect your closing.

There are many different circumstances that a Mortgage Professional at HFG will be happy to help you with; But, the safer bet is to stick with your current job until after you close on your home.

There you have it! Preventing these two common mistakes while applying for a mortgage will dramatically increase your chances of closing on your home on time. Remember, choosing the right mortgage professional is imperative. Just like people, no mortgage is created equal.

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