Not getting pre-approved for a mortgage. Being pre-approved for a mortgage means you have given your financial records and credit score to a lender and they have approved to lend you a specific amount of money. This puts you in a much better position for knowing how much house you can afford, which will help you in your home search. However, once you’ve been pre-approved, a more scrutinized look will follow from the underwriters. Pre-approval doesn’t necessarily mean you are clear to close; it’s just one step closer to a successful closing.

Altering your financials after being pre-approved. Once you have completed a loan application, do not make any major purchases with a credit card. Don’t miss any monthly payments or quit your job prior to your home closing. These scenarios will affect your debt to income ratio, which lenders use to figure how much you can be approved for. Typically, lenders do not like to approve a mortgage for a potential buyer who has a debt to income ratio higher than 36%. A lower ratio can lead to more favorable lending conditions for the buyer.

Buying the wrong house. Many people fall into the trap of buying a house because they fell in love with it, not because it fit their needs. Don’t buy more than you can afford. If you buy a home simply because it’s your dream home, but is out of your price range, you might end up in financial troubles later with your mortgage. On the flip side, don’t settle for less than you need in a home. If you need at least three bedrooms and two bathrooms, don’t settle for a home with three bedrooms and one bathroom. Do your homework and make sure you purchase a house that is within your means and fits your family’s needs.

Forgetting or betting on resale.This is a common mistake many people make when trying to find a ‘deal’ to flip and make some money on. You can’t bet on the market when looking for investment property. If buying a home to flip it, be careful you don’t spend too much. Once you go to sell the home, the marketing could have turned and you may not be able to recover your initial costs.

To avoid any delays with your next home purchase, be sure to keep these steps in mind. If you have any questions, we are always available to help answer any concerns you may have. Please feel free to contact us at any time at RogerNix@kw.com!