Most families save for years to buy their first home in Ann Arbor. Entering into a mortgage contract that will require several decades of payments is a process that requires smart decisions before, during, and after the application process. There are a number of simple mistakes that future homeowners tend to make during the application for a mortgage, and these errors may result in higher costs associated with home ownership.
When Things Go Wrong with Your Mortgage
The time that it takes to approve a mortgage is usually around a month and a half, and that’s a long time that a future homeowner must be on his or her best behavior. During particularly busy lending times, the wait may be even longer, and it’s imperative that a homeowner doesn’t make simple mistakes that could lead to a denial or higher interest rates.
Bad Habits to Avoid During the Mortgage Process
1. Closing credit card accounts
One of the factors in determining an interest rate is the number of “revolving credit” cards a family has at any given time. A few credit cards with high balances that are at the limit represent a much smaller percentage of available credit than a half dozen cards with a higher available amount of credit. Don’t close credit cards while applying for a mortgage.
2. Applying for more credit
Getting a new car loan or applying for new credit cards is a terrible idea when a family has an active mortgage application. Even if the family car is a rust bucket that barely runs, it’s best to wait a few months before heading to the car dealership to get a new vehicle. Also consider holding off on any vehicle upgrades until the mortgage has been granted. Getting an SUV with a third row of seats can wait a few months.
3. Switching jobs or employers
One of the primary indicators that a borrower will be granted approval is steady work history. Lenders often have minimums in place regarding length of employment at a single employer, and switching jobs may throw off the entire mortgage process. Outside of extraordinary circumstances, employment must be maintained throughout the application process. Likewise, an application should never be made in the first place if employment history cannot be verified or isn’t consistent.
4. Failing to pay bills
There’s a lot of work that goes into applying for a mortgage. You try to do everything right, but if you have bills that aren’t being paid on time, then you’re application is at risk of being denied. Vigilance regarding debts and payments is just as necessary after the application process has begun as it is before an application is made.
5. Keep bank accounts stable
Moving money around into different accounts, making large deposits (or withdrawals), and opening new bank accounts aren’t activities that should occur during the mortgage application process. It’s crucial to have the paperwork, receipts, or records available to document why a large deposit or withdrawal was made. Try to avoid such activities entirely until the mortgage approval is complete.
Getting a Home Mortgage in Ann Arbor, MI
Ensure your home’s mortgage approval and a successful move by avoiding bad behavior during the mortgage application process. The best behavior will always be to remain steady and consistent with all financial dealings during the application process.