6 Mistakes to Avoid when Getting a Mortgage With Late Payments – 2023 Guide
You might be caught up in thoughts of purchasing a lovely property that is up to all your standards and waiting for the right moment to make this wish come true. You already know what your garden will look like, where you will keep your fruits and vegetables, how many bedrooms there are…. But just before it goes too far and your bubble bursts – you need to consider some key factors when purchasing a new home. These mainly include some tips on how to avoid the biggest mortgage mistakes. Paying higher interest on a mortgage can cost you a lot in the long run – that’s why you need to be aware of all the risks involved. Buying a property can be tricky – and the mistakes you make in the process of getting a mortgage can affect you as long as you have a loan.
A thing that could reduce the chances of your application being approved is having late payments. It isn’t uncommon at all that at some point you miss out on occasional payment and unfortunately, any late installments may have a serious impact on your request outcome. It usually happens that we want our case to be individually approached and to be assured by experts that we’re doing the right thing. Searching for some more advice is always welcome, especially when it comes to experts in this field – the chances that you’ll make a smart financial decision can only increase this way.
If you want your path to homeownership to move in the right direction and to obtain a financially sound loan, you should start with avoiding the most common mistakes for potential homeowners. Let’s hear more about them, should we?
1. Buying a property that is more expensive than you can afford
Don’t fall into a trap and max out your loan. When a lender approves the loan that’s even much higher than your annual income, you shouldn’t get carried away and purchase out of it. It’s pretty clear that you might end up finding the management of your monthly mortgage payments quite difficult. Therefore, the best thing to do is think twice, and think wisely.
Also, you need to have in mind that a new home comes with a lot of inevitable expenses such as repairs and home maintenance. You shouldn’t be stretching up your monthly budget to be able to cover your mortgage by any means. That might mean you can’t save enough money for emergencies or certain unplanned expenses that you weren’t even thinking about while you were a tenant.
2. Changing jobs
From the career point, changing jobs may benefit you, but also it may make the whole application process complicated. If you change a job within the same field and move to a better-paid job you might not encounter any difficulties. However, always bear in mind that a lender wants to ensure you have steady full-time employment and in most cases, it should be for at least two years. So, if you’re moving to a completely different field of work that’s less paid than your application might even be rejected. The best advice would be to wait with career changes until you collected financing.
3. Missing bill-paying deadlines
In case you have a history of late payments it can lower your chances of getting the ideal interest rates and terms. Just a single late bill payment can make your credit score drop down seriously. The higher your score is – the better are the chances that the lenders would be pleased. The first step towards that is ensuring you have a good score and it needs to be worked on before even applying for a mortgage. To boost it, you should always pay your bills on time as that tells the lender that you’re a responsible borrower who doesn’t miss payment deadlines.
4. Not taking your existing credit issues seriously
If you and/or your spouse already have credit issues like a history of late payments or significant debts then you shouldn’t leave anything to chance. Since no one likes surprises in such cases, you better keep tabs on your credit! Don’t forget to carefully review your annual reports and in case you spot some mistakes in their reports, make sure you have all the necessary supporting documentation as it’ll help you to build your case. Try to always meet the deadlines and pay more than the required minimum for your monthly debt.
5. Making big purchases
You should think of making big purchases – but only after you make sure your loan is secured. If you want a good credit score you need to save as much as you can and that means to avoid spending too much on things such as buying a new car or the latest gadgets. One of the main lender’s requirements is always to have savings in your account.
6. Not considering mortgage options
Before submitting your application to a lender you should do some research first to choose an adequate home-loan that fits your needs. There are plenty of options available but not all of them are right for you. You shouldn’t make a final choice before comparing all of them – that’s for sure. If you want to know that you’re heading in the right direction with your application, you should ask for assistance from a mortgage broker. In case you make the wrong choice and your application gets denied, it goes to your credit record and can have an impact on your next application.
It’s extremely important that, when purchasing a home, buyers are aware of all the potential risks and are well educated on the most common mistakes so that they can prevent them from happening. This moment represents a big event and it needs to be pushed through carefully even though most of the time it can be overwhelming. Having experienced mortgage advisers by your side can ensure you that the whole process of getting a new home will be stress-free, enjoyable and could even help you save some money along the way. A buyer needs to avoid the above-mentioned mistakes at all costs as they might determine the fate of the loan itself. Always be extra cautious and don’t get swept up in a whirlwind of emotions when buying your first property and make mistakes that may cost you later on!