Buying a home is one of the biggest investments you will ever make. For most people, it requires a mortgage to finance it. However, the mortgage application process can be complicated, and there are many mistakes that borrowers make that can cost them money, time, and even the ability to get a loan. In this blog post, we will discuss ten mistakes that Denver borrowers should avoid when applying for a mortgage.
Please enjoy our video about how we prepare the families we serve to get “Mortgage Ready” when buying a house in Colorado. Then read on!!
![Home Buyers Guide To Getting Mortgage Ready [BLOG]](https://i.ytimg.com/vi/1ivKVnfTlow/maxresdefault.jpg)
1. Not checking your credit report
Checking your credit report is essential when buying a house in Denver. Your credit score plays a significant role in determining your creditworthiness and the interest rate you will be offered. Your credit score is calculated based on your credit history, payment history, and credit utilization. Before applying for a mortgage, it is crucial to check your credit report for errors and inaccuracies. Correcting these mistakes can improve your credit score and increase your chances of getting approved for a mortgage. Additionally, having a high credit score can help you secure a better interest rate, which can save you thousands of dollars over the life of the loan. It is also important to note that different lenders have different credit score requirements, so it’s best to get a copy of your credit report from all three major credit bureaus to get a clear picture of your creditworthiness. If you notice any errors or inaccuracies in your report, you can dispute them with the credit bureaus to have them removed. Overall, checking your credit report is a crucial step in the home buying process and can save you time and money in the long run.
2. Not shopping around for rates
Bobby Friel, our partner at Just Livin’ Realty Group has us vertically integrated. What does that mean to you? Well, he also owns a mortgage brokerage and homeowner insurance partnership.
He does all the shopping around for you our home buying client. With dozens of lenders at our disposal, we get competitive terms and interest rates for all the families we serve. The interest rate on your mortgage can have a significant impact on your monthly payments and the total amount you will pay over the life of the loan. Even a small difference in interest rates can mean thousands of dollars in savings or additional costs over the life of the loan.
Therefore, it is essential to strategize how we will navigate the housing market and the interest rate market as well. Different lenders have different rates, fees, and terms, so it is crucial to do research and compare.
Keep in mind that shopping around for interest rates can take time and effort, but we do all of this in our onboarding process as we set you up with your MLS (multiple listing service) home search. It saves you time, energy, and money BUT it can save you a significant amount of money in the long run. Bobby prides himself on negotiating the best terms for your mortgage and your sales contract when we place offers on properties.
3. Not getting pre-approved
Getting pre-approved for a mortgage can give you a better idea of how much house you can afford and help you narrow down your search. It also shows sellers that you are a serious buyer and can give you an advantage in a competitive market.
4. Taking on new debt
One of the biggest mistakes borrowers make is taking on new debt before or during the mortgage application process. This can negatively affect your credit score and debt-to-income ratio, making it more challenging to get approved for a loan.
5. Not having enough savings
Buying a home comes with additional costs such as a down payment, closing costs, and moving expenses. It is essential to have enough savings to cover these costs and have a financial cushion for unexpected expenses.
6. Not disclosing all financial information
Lenders need to have accurate and complete financial information to make a lending decision. It is essential to disclose all sources of income, debts, and assets, even if they do not seem significant.
7. Making large purchases before closing
Making significant purchases before closing, such as a car or furniture, can increase your debt-to-income ratio and affect your credit score. It is crucial to wait until after closing to make these purchases.
8. Not understanding the terms of the loan
It is essential to understand the terms of the loan, including the interest rate, monthly payments, and any fees associated with the loan. Not understanding these terms can lead to unexpected costs and financial strain.
9. Co-signing for someone else
Co-signing for someone else’s loan can affect your credit score and debt-to-income ratio, making it more challenging to get approved for a mortgage. It is best to avoid co-signing for someone else’s loan during the mortgage application process.
10. Changing jobs
Changing jobs during the mortgage application process can negatively affect your credit score and debt-to-income ratio. Lenders prefer borrowers who have consistent employment and income.
Applying for a mortgage can be a complicated and stressful process. Avoiding these ten mistakes can help you get approved for a loan and avoid unexpected costs and financial strain. Remember to do your research, disclose all financial information, and understand the terms of the loan. With these tips, you can make the mortgage application process smoother and less stressful. Ready to buy a house in Denver? Reach out to Just Livin' Realty Group today to find out how we can help! 720-799-2202