MORTGAGE LOAN APPLICATION MISTAKES
Avoiding costly mistakes

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Number ONE loan application mistake:

1. Not fixing your credit

Mortgage loan brokers say they're amazed at the number of buyers who apply for a mortgage with their fingers crossed, hoping their credit will allow them to qualify for a loan.

Before you apply for a mortgage, obtain copies of your credit report and your FICO credit score. Your FICO score is the three-digit number that's used to make mortgage-lending decisions. It is based on; 1.Payment History, 2. Amounts Owed, 3. Length of Credit History, 4. New Credit (Number of recent credit inquiries etc..), 5. Types of Credit Used.

Do this at least six months in advance. This should give you plenty of time to challenge any errors on your report and ensure that they're removed by the time you're ready to apply for a loan. You can also see the legitimate factors that are hurting your score and do something about them, such as paying off an overdue bill or paying down credit card debt. Of course if everyone could pay off their credit cards, they probably would have already done it. But, possible you can pay off those cards with high monthly payments or higher interest rates. Maybe paying off a card with a small balance will greatly reduce your monthly bills.


Reviewing and considering the implications of your Credit Report six months prior will also help prevent these related mistakes:

  • Over Shopping Your Loan

Each time you call a lender seeking the best possible rate and terms you have your credit report pulled. Every time your credit report is pulled you risk decreasing your credit score and thus possibly decreasing the likelihood of getting the best rate and terms. Experts recommend that you select a mortgage broker with a number of investors and do your shopping with her/him.

  • Hiding Things From Your Mortgage Broker

Most of us have experienced times of financial difficulty at some point. While it can be embarrassing to discuss issues like this, your mortgage broker is there to help you get loan approved despite such issues. Your mortgage broker can only help you with those things with which s/he is aware.

  • Making Late Payments

Late payments, especially those within the last year, can be very detrimental to getting the best rate, terms and even the difference of being approved at all. While this might seem like unnecessary advice, ALWAYS pay on time.

  • Over Using Credit Cards

Credit cards are a convenient way to make purchases, but if not paid off or balances kept low you might find it more difficult to get the best rates and terms on your mortgage. Keeping your total debt as low as possible helps you get the mortgage that best meets your specific needs.

  • Cosigning On Someone Else's Loan

While it can be a great service to a friend or loved one, signing to guarantee someone else's loan is often a big head ache for the cosigner. Before cosigning you decide if you're willing and/or able to assume the liability.


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