Applying for a mortgage is one of the most significant financial decisions you’ll make, and it’s crucial to get it right. While the process might seem overwhelming, avoiding common pitfalls can save you time, money, and stress. Bruce Singer from Vision Home Mortgage shares some of the top mistakes to avoid when applying for a mortgage.

1. Not Checking Your Credit Score Early

Your credit score plays a crucial role in determining your mortgage eligibility and the interest rate you’ll receive. Many potential homeowners don’t check their credit score early enough in the process. It’s essential to review your credit report at least six months before applying for a mortgage. This gives you time to correct any errors and improve your score if needed.

2. Taking on New Debt

Lenders assess your debt-to-income ratio (DTI) when evaluating your mortgage application. Taking on new debt, like a car loan or opening new credit cards, can increase your DTI and lower your chances of getting approved for the mortgage. Even if you’re tempted to finance new furniture for your future home, it’s best to wait until after the mortgage is finalized.

3. Making Large Purchases or Transfers

Large purchases or transfers in your bank account can raise red flags for lenders. They may view these transactions as a sign of financial instability or question where the funds are coming from. To avoid complications, refrain from making any significant financial moves during the mortgage application process.

4. Not Getting Pre-Approved

A pre-approval letter from a lender shows sellers that you’re serious and financially capable of buying a home. It also gives you a clear idea of how much you can afford. Skipping this step can lead to disappointment if you find your dream home only to discover you can’t get the financing needed.

5. Changing Jobs or Employment Status

Lenders prefer stability, especially when it comes to your employment. Changing jobs or your employment status during the mortgage process can delay or even derail your application. If you’re considering a job change, it’s advisable to wait until after your mortgage has closed.

6. Neglecting to Shop Around for the Best Rate

Many homebuyers make the mistake of settling for the first mortgage offer they receive. Mortgage rates and terms can vary significantly between lenders. Take the time to shop around, compare offers, and negotiate to ensure you’re getting the best deal possible.

7. Ignoring the Total Cost of Homeownership

A mortgage payment is just one part of the total cost of owning a home. You’ll also need to consider property taxes, homeowner’s insurance, maintenance, and potential HOA fees. Failing to budget for these expenses can lead to financial strain down the road.

8. Not Understanding the Different Loan Options

There are various mortgage products available, from conventional loans to FHA, VA, and USDA loans. Each has its own set of qualifications, down payment requirements, and benefits. It’s essential to understand the differences and choose the one that best suits your financial situation and long-term goals.

9. Skipping the Home Inspection

While a home inspection is not always required, it’s a critical step in the home buying process. Skipping it to save money can lead to costly surprises down the road, such as major repairs or structural issues. Always invest in a thorough inspection to ensure you know exactly what you’re buying.

10. Forgetting to Budget for Closing Costs

Closing costs can add up quickly, often totaling 2-5% of the home’s purchase price. Many buyers focus solely on the down payment and forget to budget for these additional expenses. Make sure you have enough saved to cover closing costs to avoid any last-minute surprises.

Applying for a mortgage doesn’t have to be a stressful experience. By avoiding these common mistakes, you can navigate the process more smoothly and secure the home of your dreams. If you have any questions or need personalized advice, Bruce Singer, Senior Loan Officer 702-217-5525, NMLS # 197960 and the team at Vision Home Mortgage, NMLS # 357565 are here to help guide you every step of the way.