Your home loan or mortgage application is a big milestone worth celebrating! After all your home is one of your life’s biggest investments!
A home loan is a step that you will inadvertently take on your journey to homeownership. Choosing a lender and applying for a home loan is definitely on the cards unless you can afford to pay cash and buy your home that way. Yet, without the right insight into the process, the prospect of filling out the paperwork and putting in the research can be daunting. What if you make a mistake?
On the flip side, lenders are looking for trustworthy buyers before they can approve your loan. They want to know as much as possible about you – who you are, what you do for a living, what are your finances like, what are your savings like? There are always heaps of questions.
The market too is changing and the financial rules are becoming more and more stringent. With the tightening of the rules, there is little or no margin for error in your application.
In this blog post, we discuss the 5 mistakes that you must avoid while filling your mortgage application. We, at MSA Frontline Realty, have supported buyers as well as sellers in their journey to home ownership and have seen hundreds of successful mortgage applications in this time. We speak from experience – What are the dos and don’ts? What are the lenders really looking for?
Here are the insights that will help you make a winning entry and up your chances of making the lender’s cut.
1. Shop around for the mortgage deal that best suits you
Search in earnest for the best deal that you can find. This goes beyond just the interest rates that are on offer. While the interest rate is an essential factor there are other things to consider such as the lender’s loan-to-value ratio, and other features of the loan and the benefits.
Use a comparison tool to look for the best available options in the market. The market may be teeming with options. However, you will notice that only a handful or so will meet your needs. Also, ask your real estate agent for tips. Your agent is equipped with this knowledge, having worked plenty of successful cases and it is in his interest to help.
2. Don’t lie about your income and expenses
Lying about your income and expenses is the worst mistake that you could make while applying for a mortgage. Lenders can detect red flags in your application. They also have a method of verifying your details, uncovering inconsistencies as well as cross-checking documentation.
The lenders use your details for assessing your borrowing power. And any incorrect information can impact this calculation. However, honest mistakes may happen – such as an overlooked bill or debt, and it is important to bring these to the lender’s attention urgently and immediately.
3. Check and review your credit report and score
Your credit score is an important factor that determines the fate of your mortgage application. It is important to have a thorough scroll-through of your credit report and score before submitting your application. It is also important to not miss this step at the risk of impacting your application.
Banks and lenders use your credit score to determine your borrowing capacity. Your credit history and repayment patterns can help paint a very realistic and accurate picture of your finances and your attitude towards your finances. The two things they look out for are – your overdue balances and missed payments.
4. Submit an application riddled with mistakes
Mistakes aren’t uncommon in an application and they may well be genuine mistakes too. However, it is imperative to check your application thoroughly and ensure accuracy as an application riddled with mistakes can impact your chances of succeeding.
Usually, mistakes occur when you are filling out the paperwork in a haste. Make sure you give yourself sufficient time – filling out details in an iterative manner – and do not rush the process. Also, ensure that you give yourself enough room to go through the application several times at the end before submitting it. Have your financial adviser or real estate agent review your application too.
5. Not having enough savings or enough genuine savings
Making last-minute transfers to “show” savings or making up figures as you go – can be a detrimental practice. Your savings are an indicator of your financial health and to your lender, this is a crucial factor in deciding which way they take your application.
Banks are more willing to provide you with features and perks such as – low-interest rates and waived fees – if you shoulder a significant amount of deposit for your home purchase. First home buyers schemes and rate cuts are also available through state and federal government to buyers and we will discuss these in greater detail in our upcoming article.
MSA Frontline Realty
If you have any questions about the article or want to know more about home loan and mortgage options available for you, please don’t hesitate to contact Mario from MSA Frontline Realty. I am a licensed real estate agent with all the experience and skills that you need.
Call me today for a confidential discussion on your dream property. Let’s make your dream a reality!
Mobile: 0419 186 919