Avoid Crucial Loan Mistakes
A large part of the purchasing process, is dealing with a lender for your mortgage. Here are some crucial mistakes you should avoid when attempting to obtain a home loan.
Making a Career Change
Changing careers while you are attempting to get a home loan can negatively affect your loan process. While switching jobs may be the right choice for you, for any variety of reasons, lenders see it as a sign of instability. In fact, most lenders consider any career period of less than two consecutive years a risk. From a lender’s perspective, if you are not established in a work environment, chances are, you may never have an established working situation. Inconsistency breeds risk as far as your lender is concerned. It's usually a good idea to wait until after you've secured the loan to make a career change.
Making a Major Purchase
Many people unknowingly make it more difficult for them to obtain a home loan. They do this by extending themselves financially through a major purchase, like a car. Buying a new car can mean at least fifteen thousand dollars of new debt on your credit record. Lenders are in the business of assessing risk. By opening new lines of credit you are increasing your risk factor to a lender.
Making a Bank Change
The balances of your bank accounts are a serious consideration when a mortgage company decides to lend you money for a home. Changing your account balances, closing accounts, or changing banks unnecessarily complicates the loan process. If you must change banks for your home loan, be sure to do it with good reason. Then it is a good idea to contact all involved parties and let them know what you intend to do and why you plan to do it. If you can manage, though, it’s usually a better idea to wait until after you’ve secured your mortgage.
Paying Off Existing Accounts
Don’t make the mistake of paying off current debts unless your lender requests that you do so. Paying off old collections typically causes your credit score to drop. A lender usually considers only the last two years of activity.
About the Author
Chris Parry is a successful freelance writer and journalist, and has provided features for many media outlets including About.com, InternetContent.Net, and eFilmCritic.com among others. His most recent features include contributions to Lake Arrowhead Real Estate, a user's guide to buying real estate in Lake Arrowhead that includes access to the Lake Arrowhead MLS.
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