Getting Preapproved: Shopping for a Mortgage Loan Three BIG Mistakes To Avoid
Getting Preapproved for a mortgage loan can be a difficult and trying time, even for people who make a lot of money and have good credit. When shopping for a mortgage loan, there are several things that can cause the loan to be rejected. By avoiding these common mistakes, you can ensure that the loan process goes smoothly. No one likes unpleasant surprises at closing.
The first common mistake made by many individuals getting preapproved for a mortgage is to quit or change jobs just prior to shopping for the loan. Having a steady employment history is one of the things that mortgage lenders look for when evaluating a loan application. Many lenders would like to see that their applicants have been on the job for at least one year, because it demonstrates stability in the individual and an ability to repay the loan. Changing jobs will also change the amount of money that you are making, so any quotes obtained before the position change will become unusable.
Another common mistake when shopping for a mortgage loan is to allow additional creditors to pull up your credit history. You should minimize that number if you can, by not applying for other credit. Many people do not realize that their credit report will be pulled numerous times between getting preapproved and closing escrow. The number of times that your credit history is pulled can adversely affect your credit score, lowering it each time an inquiry is made. If the score drops a sufficient amount, the interest rate of the loan could go up or the loan could become unapproved because of the lower credit score.
Don’t acquire any additional debt. Purchasing a car, or becoming a co-signer on any type of loan prior to closing escrow can damage your chances of final loan approval. It may drop your credit score because of the inquiry into your credit history and it shows that you have recently acquired a significant amount of debt, which diminishes your ability to repay a loan.
By avoiding these common pitfalls when shopping for a mortgage loan, you will stand a better chance of having the loan approved when you find a lender to work with. Having a loan process that is easy and hassle free should be the goal of anyone attempting to obtain a mortgage loan. Following these tips can help you make your loan process hassle-free.