Avoiding Common Mortgage Mistakes

As you think about buying your home in Maine, it’s important to be aware of common, mortgage-related mistakes homebuyers often make. By avoiding the following mistakes, you will increase your chances of a smooth mortgage experience:

Failing to Check Your Credit Report

Neglecting to check your credit report for inaccuracies can hinder your mortgage approval. Lenders rely heavily on credit scores and reports to assess creditworthiness, so it is crucial that you ensure your information is correct. By correcting any discrepancies, you’ll improve your chances of securing a favorable mortgage.

Underestimating Costs of Homeownership

As you plan for homeownership, it’s essential to focus on all expenses for which you’ll be responsible. These include your mortgage payment, property taxes, insurance, utilities, and maintenance costs. Failing to account for all expenses can result in undue financial stress down the road—or even defaulting on your mortgage.

Applying for New Credit

Applying for new credit before or during your mortgage application process can negatively impact your DTI (debt-to-income ratio) and even possibly disqualify you. Lenders look for financial reliability and stability in borrowers. Applying for new credit will increase your debts and possibly affect your ability to make monthly payments.

Failing to Focus on Your DTI

Lenders use your debt-to-income ratio to evaluate your ability to manage debts and make monthly payments. A high DTI ratio indicates that a significant portion of your income goes towards debt repayment, which can result in higher interest rates or even rejection of your mortgage application.

Not Getting Pre-Approved

Pre-approval offers you a clear understanding of how much you can borrow, so you can make a strong offer on the right property. Pre-approval also streamlines the closing process, because it allows you to complete much paperwork and verification beforehand. By obtaining pre-approval, you’ll save time and enjoy a more successful mortgage experience.

For more information and answers to all your mortgage-related questions, we invite you to contact KFS Mortgage Company.