Buying your first house could be an exciting as well as a stressful experience. But with proper planning and analysis, things can become much easier. Here we list some common mistakes you need to avoid for securing a quicker house mortgage loan. Then, finding your dream home will be the only thing you need to focus on next.
1. Don’t Invest In A New Car
Once you have decided to buy your house, you have to put a hold on temptations for a new car. Buying a car or even leasing one could bring a huge difference to your debt-to-income ratio. Especially when you are planning for a house mortgage loan, most money lenders take this seriously. Cars are big enough assets that cannot be ignored when considering your capabilities to repay loans.
2. Don’t Switch Jobs
A stable job is welcomed by mortgage lenders. However, job changes during your loan application might raise red flags for them. You need to consult your lending agent before any such decision-making. Even switching to a better profile and pay might also fail to impress money lenders. Staying on your old job is a sign of stability to lenders in your regular income and repayment capacity. Changing from a permanent role to a part-time or contracting job would definitely affect your chances of securing a house loan.
3. Don’t Let Your Credit Score Down
Hard inquiry credit checks affect your overall credit score every time. Credit disputes do the same too. You need to strictly avoid these until your mortgage loan gets approved. Dispute resolutions take months to get reflected on your credit report. Take care of these well ahead of your loan application or leave them until your loan has been secured. Even small credit falls could also lead to loan rejections or revision of pre-approved return rates.
4. Don’t Fail Bill Payments
Missing out on bill payments could be another mistake you need to avoid. Don’t let the stress from planning a new house get the better of you in this case. Any other mortgage payments or utility bills should be cleared on time. Failed payments in your credit report could deny you any mortgage loan for over a year. Lenders consider missed payments as big negatives even if you have a good overall credit score.
5. Don’t Ignore Tax Benefits
Getting your own house makes you liable for certain property taxes. Many first-time buyers are also ignorant about the rebates they could claim under income tax laws. A lack of research on your part could put you in a state of loss in both situations. Consult your lending agent for eligible rebates in your state. And keep a check on the payable property taxes to avoid tax evasion tickets from the authority.
6. Don’t Look For New Lines Of Credit
Stuffing your first house with new furniture and appliances would tempt you for sure. But you need to avoid giving in to additional credit purchases. New credits affect your debt-to-income ratio again and don’t sound good to lenders. Don’t get lured to credit extensions for your existing cards too. This could spell trouble as well if you’re sitting on the edge of loan approval.
7. Don’t Ignore Your Neighborhood
Knowing the neighborhood around a house, you plan to purchase is an excellent idea. This could be your permanent address for a long time, and you would want it to be safe. Gather information about the nearest commercial and emergency service locations. Talk around to know about planned constructions for that area. Understanding local zoning laws could be helpful in the future too. Too many underdeveloped areas nearby could encourage anti-social elements that might pose future threats. Even close proximity of your new house to industries could prove to be a health hazard for your family. You need to know about these before you buy.
8. Don’t Select A Wrong House
A good credit report makes you eligible for a higher amount of loan. But it doesn’t mean that you have to avail the entire amount approved. Buying your first house is an important decision of your life, and you need to consider a lot of things before the actual purchase. Monthly loan repayments, installment schedule, and loan tenure should be at the top of your priority list. Good finances are not permanent, so you need to plan accordingly. A house that is sufficiently accommodating and affordable should be your interest. The money you save will always come in handy for useful purposes later.