We understand that buyers are not immersed in the world of mortgages as we are. Here are some things to think about when looking to finance a home purchase.
Here are the Mistakes:
Not checking your credit before starting the process
You are making a major purchase and we will be looking at your credit history. We need to look at everything in your credit reports and be able to account for what we find.
You shouldn’t be surprised to find some unpaid or late credit card account out there. You don’t want to be scrambling to deal with some old debt that could jeopardise the purchase of your dream home.
You can pull your credit reports yourself before you begin the process.
Not getting pre-approval
Contact us and get a pre-approval. By going through the process first, you get a huge leg-up and avoid problems. You don’t want to lose that dream home because you waited to start the loan process until the last minute.
- Filling out the paperwork and verifying income needs to get done anyway.
- It shows sellers that you are a serious buyer.
- It makes the process easier.
- It lets you know what you can really afford.
Applying for some other credit during the home buying process
Applying for new credit cards will cause your credit score to dip temporarily due to the application credit check.
Also, the same goes for closing an old account. It affects the amount of credit you have available, which will negatively affect your score.
Hold off your car loans and credit cards until your home financing is in place.
Changing your job before you apply for a mortgage
Underwriters will want to see that the income you bring in every month is consistent and expected to continue into the future.
You should work on your debt-to-income ratio. That’s the amount of money you make versus how much you owe. Lenders also take this into consideration when you apply for a loan, so it might be a great idea to try to reduce your debt or increase your income.
Don’t quit your job and lower your income. Purchasing a home is a commitment and you should focus on that first.
Of course, if you will be leaving your job, make sure you don’t sign up for payments that you won’t be able to cover once you leave.
Not having a down payment
Sure, you don’t have to put down a huge down payment, but you should try to if you can.
Big down payments save you a significant amount of money. Save up for the biggest down payment you can afford so you can take advantage of bigger loans, smaller interest rates, and more attractive closing fees. Most loan programs usually require a down payment that falls somewhere between 5 percent and 20 percent. In some cases, if you can’t afford a 20 percent down payment, your lender might require you to pay for mortgage insurance (PMI) because they’re increasing their loss risk by loaning you more money.
Trying to time the market
Of course you want low rates, that makes sense. You shouldn’t just drag the process forever or jump in before you are ready based on a percentage.
The truth is that if rates radically go down, you can refinance. Just call CFS Mortgage at 312.642.7979 so you know you are getting the best deal in Chicago.