The whole process of mortgage loan application can be challenging and confusing. Most lenders will not approve a loan unless you’ve proven your creditworthiness. Problems may arise, which vary from simple typographical errors to major credit issues.
American Bank & Trust outlines some of the most common mistakes you should avoid when applying for a mortgage.
Incomplete Employment History
It’s important that you provide a 2-year employment history to increase the chances of getting your loan approved. People who have been self-employed and only has a business license for years may find it difficult to apply for a loan. However, every lender is different. There may be times when all you need to get approved for a loan is a letter of explanation about your employment status.
Poor Credit History
Most lenders will look at your credit history to check if you’re financially fit to apply for a loan. Ensure that your credit score reaches 740 before applying for a mortgage. Anything below that mark may also cause your loan application to get disapproved. See if there are any errors on your credit report and have them corrected right away.
Lack of Savings
If your declared income won’t be able to cover your monthly expenses, then most lenders will check your money in the bank. They will question your capacity to pay if you don’t have enough assets to cover at least a portion of your loan. That’s why it’s important to start saving as much as you can prior to your application.
One of the most common errors that loan applicants make is supplying insufficient information in their application. Many loan officers review the application thoroughly before submitting it to the underwriting team. However, there are still some instances when certain information is overlooked. It’s important to review your application paperwork before you submit it for approval. Keep in mind that an underwriter will have problems moving your application forward if it lacks the necessary information.
It’s always best to be prepared before you do something. Now that you know the mistakes you should avoid, you may start your mortgage application process and own your dream house soon.