When shopping for a mortgage loan there are a number of mistakes homeowners make. These mistakes can be costly and the best way to avoid making them is to educate yourself on the process. Here is all you need to know before refinancing your mortgage.
If you are in the market for a new mortgage there are a number of steps you can take to avoid making mistakes that can cost you a lot of money. Protecting your credit should be your first priority while shopping for a mortgage. As a smart homeowner, you need to research mortgage lenders and compare their offers.
Mistakes can damage your credit and affect the interest rate you are able to qualify for. Here is how to avoid making three common credit mistakes prior to shopping for a mortgage.
Make Your Payments On Time
Even people with good credit ratings occasionally make late payments. If you are applying for a mortgage you need to have a good payment history on your record. Mortgage lenders use your prior repayment history to gauge how much of risk you are for lending.
If you have late payments on your credit history you can still be approved for your mortgage; however, the interest rate you pay and the terms you receive may not be as good as if you did not have late payments. Before you start shopping for a mortgage it is important to have at least six months of on-time payments on your credit record.
Do Not Allow Lenders to Access Your Credit While Shopping
A mistake many homeowners make is allowing multiple mortgage lenders to access their credit records. When you shop for a mortgage loan you need to shop smartly. Always request no obligation quotes from the mortgage lenders you are considering.
By requesting a no obligation quote from a mortgage lender you will need to proved an accurate assessment of the state of your credit. You will need to request credit reports from the three credit agencies. Do not overstate your income or credit; this may result in the lender changing the terms of your loan or denying your application.
Hold off on Major Purchases or New Credit Accounts
When shopping for a mortgage it is essential to have a low debt-to-income ratio. Opening new credit accounts while applying for a mortgage is a mistake. Purchases on credit like automobiles or household appliances will lower your credit score. Your credit score directly impacts the interest rate lenders are willing to give you on a mortgage. Before mortgage shopping it is best to pay down the balances on your credit cards and close cards you are not using.
To learn other common homeowner mistakes you need to avoid when shopping for a mortgage sign up for a free mortgage guidebook.
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Tucson Mortgage Refinance
Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker. He is the owner of Mortgages Refinance Advisor, a mortgage help site devoted to saving homeowners money with a free guidebook Mortgage Refinance: What You Need to Know.
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