Getting a mortgage may be a straightforward process, but there are many mistakes you can make that could cost you, not only with higher costs but also the ability to secure a mortgage at all. Taking the right steps can help you avoid common mistakes along the way toward buying Irvine, CA, real estate. Here are some of the most important do’s and don’ts of the mortgage process.
Do: Get Preapproved Before Shopping
Getting preapproved for a mortgage is almost the same process as getting a home loan. It requires submitting a full application and providing information to your lender about your debt, income, and credit. Getting a pre-approval letter isn’t a guarantee that you’re approved for a mortgage, but it can help you determine how much home you can afford, and it gives you a price range to start shopping. When you do find a home you’re ready to buy, a preapproval letter from a lender will also make your offer stronger.
Do: Respond to Team Members Promptly
You should expect to hear from your team of loan and real estate professionals fairly often throughout the mortgage process. You’ll be kept up to date on the progress of your loan application, and you may be required to provide additional documentation. Being available can help your loan close on time.
Do: Make Sure Bills Are Paid on Time
It’s crucial to avoid any late payments on your credit report during the mortgage process. Depending on your credit score, even a single late payment could lower your credit score to the next bracket and cost you thousands over the life of your mortgage. It may even be enough to disqualify you from a home loan. A strong payment history can increase your chances of being approved for a loan more than almost any other factor.
Don’t: Make Major Purchases or Decisions
When you’re buying a home, it’s time to focus on saving money, not spending. Avoid any large purchases such as a new car, major appliance, or furniture because they could affect your credit score and reduce the savings you need for closing costs, a down payment, and reserves. You should also avoid other major financial decisions during this time, such as changing jobs. Your lender wants to see stable employment of at least 12 months with the same employer.
Don’t: Apply for New Credit or Close Accounts
Credit inquiries alone can damage your credit score when applying for new credit, such as a car loan or credit card. Opening new accounts can also reduce the average age of your credit history, another important factor in your credit score. It’s also a good idea to avoid closing any credit accounts until you close on your home, even if you aren’t using the accounts. Even unused credit accounts are important for your credit history and your credit utilization ratio, or how much of your available credit is in use.
Make sure to follow the above tips if you’re planning to buy a home for sale in Irvine. You should also make sure to work with a trusted real estate agent who knows the local market well. Get in touch with the friendly agents at Irvine Residential Living today at 714-454-6304.