A mortgage is one of the biggest investments that someone can make. As time goes on and home improvements are made, the value of the home increases, therefore giving the homeowner an investment. They could sell the home and pocket the cash – if deciding to rent – or they could sell the home and use the funds toward other home mortgages in Boyertown.
However, a mortgage is also a very in-depth process that can be quite confusing for the first-time homebuyer. A few common mistakes could be the deciding factor on if the loan is approved or not. And, several of the most commonly made mistakes could have easily been avoided from the beginning.
A few common mistakes made on applications for home mortgages in Boyertown and other areas include:
1. Failing to document large deposits.
Lenders will always be required to inquire about large deposits. According to lending guidelines, if the deposit is over a certain amount – typically this is based off a certain percentage of the borrower’s income – then it must be documented with a paper trail.
If the deposit was cash, it must be documented with a gift letter from the donor.
2. Causing major changes to the credit report.
In the mortgage process, the value of the credit report is incredibly high. Doing anything that could cause a major change such as taking out new debt or missing a payment could cause a major hiccup in the mortgage loan process.
Things that affect individual credit scores could also cause a change in the pricing of the loan or even in the overall qualification of the borrower.
3. Moving money around.
Similar to the reasoning in regard to failing to track large deposits, everything must have a record to go with it. Therefore, if money is moved around, a statement must be provided to show where that money came from.
4. Changing careers.
Not only does additional resources changing careers affect income but it also affects work history. Lenders are required to obtain a certain amount of work history from each borrower. By changing jobs, more information might need to be provided in order to qualify.
A mortgage is a major milestone in life and it is a major investment. Because of the risk presented to he has a good point the lender by giving out such a large lump sum of money, several precautionary measures must be taken in each case. By making any major financial or life changes prior to applying for a mortgage, or during the mortgage process itself, a borrower could potentially disqualify themselves and cost themselves the home.
It is best to discuss all major financial decisions with the lender prior to making them to ensure no negative consequences will result.