One of the biggest investments in life (if not the biggest one) is when the time comes to buy a house. I am positively sure that anyone who has ever done it must have been very excited about it.
At the end of the day, you are fulfilling one of your biggest dreams and you have finally managed to find the house that you’ve always wanted. What a great feeling! But then your dream is shattered to pieces because you’ve made some mistakes during the loan application.
And you’re unsure what happened. In order to make things a bit clearer when it comes to this, today I’ll discuss the most common mistakes people make when they are applying for a loan, so you can get yourself familiar with them and do whatever it takes to avoid them.
Prioritizing Home Shopping Before Considering Your Finances
I mean I completely understand if you cannot wait any longer to purchase your house, however, there’s no point in fantasizing and losing your mind over the properties you simply cannot afford. After all, you’ll end up being very disappointed and heartbroken.
So why would you do something like this to yourself? However, something like this can be avoided with a pre-approved loan. By doing this, you will know upfront how much you can afford which means that you’ll avoid blowing your budget.
On the flip side, if you currently do not have the means to obtain a house, yet you’re not sure you can apply for a house loan, then maybe you still shouldn’t give up on the house you live in, so instead of moving out, maybe you should consider renovating it.
At least you won’t be needing as much money for remodeling as you would need for a home purchase. I’ve heard lately that there are lots of lenders who offer great and fast services and will approve your house renovation loan very quickly.
But where can you find them? If you live in Singapore, then consider yourself lucky, because out there, there are a lot of trustworthy lenders that will explain to you how to properly apply for a Renovation Loan in Singapore, and that simultaneously provide excellent conditions. I believe that this is generally a great option if you do not have enough cash to buy a house.
Did You Review Your Credit Score?
This is also one of the most common mistakes people make when applying for a house loan. Namely, they tend to overlook reviewing credit score before they make a home loan application, which is a huge mistake because practically every lender take something like this into account when determining whether a potential homebuyer is creditworthy or not.
Bear in mind that applicants who have a credit score of at least 750 and more have higher chances of acquiring home loan approval precisely because they are perceived as someone who is creditworthy.
Moreover, a lot of lenders tend to provide home loans and the lowest possible rate to those who have excellent credit scores. What experts suggest when it comes to this is to fetch your credit score report at regular intervals if you’re planning on applying for a home loan in the nearest future.
Not Getting Preapproved
Getting pre-approved for a home loan is not something that you should potentially consider, but something that’s practically mandatory. A vast majority of lenders offer preapproval letters to provide clarity around a potential homebuyer’s creditworthiness and capability to afford a house within a certain price range.
Preapproval letters are usually one of the first steps that are taken during this process and something that you should have by your side once you begin making offers. Keep in mind that preapproval showcases how much money is at your disposal, as well as the type of home loan you will most likely qualify for and the interest rate the lender will offer to you.
As I previously told you, a credit score is essential to a lot of lenders, which is one of the main reasons why they will check it, along with your credit history, existing debts and assets, latest pay stubs, tax returns, and much other relevant information.
Why is important to be preapproved? Well, that’s because if that’s the case, the lender is going to be sure that you are professional and serious about this entire endeavor. Perceive a preapproval letter as a prerequisite for your offer to be taken into account.
In addition, preapproval enables you to target your house search to your price point and make it more obvious that you’ll be capable of financing the home when it’s time to buy it.
Not Being Precise Enough When Reporting Your Salary And Costs
Unfortunately, there are some homebuyers who take things very lightly when it comes to this. They believe that they can freely put any information about themselves (that’s generally perceived as relevant) without making sure that it’s actually accurate.
What they fail to realize is that applying for a home loan is a very serious process and that their finances are practically put under the microscope. Misrepresenting your current situation (in terms of finances) is a very big deal and can cause lots of trouble for you.
Besides, in case you didn’t know, your lies cannot be hidden forever. Keep in mind that at some point (and that’s inevitable), lenders are going to get accurate info about your finances and will find out that you were lying all along.
In these types of situations, there’s no such thing as “white lies”. Every single thing that you “forget” to mention is going to “push you away” further from the home loan. So what can you do to prevent this?
First and foremost, you must be honest in your report. Don’t forget that lenders will demand income statements from your employer, along with access to your bank statement because all of these things must be reviewed. Also, remember that having consistent savings is important too.
Purchasing a house and applying for a home loan is definitely not something that you do every day, which you why you must do whatever it takes to do it the right way. if you agree with me, then pay attention to these tips above.