Mistakes Your Mortgage Lender Does NOT Want to See
Buying an Ulster County house can be a difficult process. Many Ulster County buyers find the process time consuming, stressful and downright confusing. During this process, many buyers make mistakes in the eyes of the mortgage lender that can cost them their loan.
When working with a lender, Ulster County home buyers will want to avoid these six common mistakes that can change your ability to get a mortgage.
No Down Payment
The down payment is hard to obtain. It is often at least twenty percent of the estimated loan amount. This is not a small amount to save for and there are few people that have it when they beginning the Ulster County home buying process. Currently, mortgage rates are so low that it may be beneficial to buy a home without twenty percent down.
A lender will often work with a borrower that does not have twenty percent to put down. Some even offer loans without anything down.
When there is less than twenty percent down there will need to be private mortgage insurance. This is an additional monthly cost until that twenty percent point is paid.
The interest rates are at record lows. Ulster County home buyers should get this rate locked-in when they can. If that means paying a little extra for PMI than it could be a good trade-off. Waiting too long may lead to a loan with higher interest rates.
One and Done
It never hurts to shop around. The first mortgage lender a person talks to is not likely the one they will go with.
All lenders have different rates that they can offer on mortgage loans. They also may have different programs to help first-time Ulster County home buyers obtain a down payment or closing fees.
The interest rate can change how much is paid over the course of the loan. Even a slight increase can mean the buyer is paying thousands more by the end of the term. That means shopping around can save a buyer a large amount of money.
Pre-Qualification Can Be a Waste of Time
A pre-qualification is not going to help a buyer make an Ulster County house purchase. The current market is a very competitive place and sellers want to see buyers with pre-approvals.
A pre-qualification is the step before becoming pre-approved. The lender goes over the financial information without making an official pull of credit. It is a glimpse into whether the borrower would be a good fit for the bank.
A pre-approval is the official process. The lender will do a credit check and verify all information that is provided. This includes debts and income. An underwriter will review the findings and either approve or deny the loan. Once approved, the pre-approval letter will be provided.
Applying for Additional Credit
While applying for a mortgage or even when thinking about a mortgage, it is best to avoid opening new accounts. Anything that will add an inquiry to a credit report should be avoided for a while. Too many inquiries will drag down a credit score.
Applying for many loans or credit cards while trying to get a mortgage will make a lender think there is less financial stability than previously thought. They will assume these loans and credit cards are needed to pay for the mortgage. The lender has the right to pull funding or deny a mortgage if they believe it could end badly for the bank.
Changing Careers
It is best to save any job or career changes until after the loan is secure and a property is purchased. If a change must be made during the process it is vital to tell the lender right away.
Reporting this change could alter how the lender wants to approach the situation. Usually, it is as simple as getting a letter from the new employer outlining the pay and verifying employment.
Significant Cash Infusions
The amount of money going in and out of accounts should be consistent. Large sums of cash flowing in or out suddenly will send red flags to a lender. This is true especially if the money is going to be used as a down payment.
The down payment amount should stay in one account and not be touched until the process is over. This shows consistent funds and stability.
Applying for mortgage can be a delicate process. There are many ways that Ulster County buyers can ruin their chances to get a mortgage. Even before the process starts a buyer must be aware of their spending, their credit score and their finances as a whole. During the process, they should avoid opening new accounts or moving into a new job.