Things to Consider After Applying for a Mortgage

Applying for a mortgage can take a while. While you wait, it’s easy to think about everything you can buy for the new home. Although it’s exciting to think about the future, there are some things you shouldn’t do while the mortgage is still in the process of approval.

Owning a new house is a significant life change, and it’s common to assume your application can get approved based on the documents submitted. However, think about all the things that can impact your mortgage application which may cause it to get rejected by the financial institution you applied for.

Things to Consider

1. Major Purchases. Mortgages are long-term obligations that can change your debt-to-income ratio. Although most people prepare for it, mortgages should be the only thing you’re paying for as you apply for them. Financial institutions tend to check an applicant’s debt-to-income ratio for them to assess if the applicant can still handle another monthly fee added to what they’re currently paying for. During the application process, try to avoid buying anything that will increase your debt-to-income ratio. Pay your credit card balance, outstanding car loans, or personal loans and avoid them if you can. Save all the extra money you have for the down payment. This can give you a better chance of a better deal from the financial institution you’re applying to.
2. Losing Track of Bills. Lenders consider the applicant’s responsibility when filing for a loan. Therefore, it’s essential to keep track of your bills at all times, especially when the application is still in the process of approval. Financial institutions may look at your payment history to decide if they allow you to loan or not. Staying on top of your bills doesn’t only show that you will pay the loan according to the lender’s terms, but it also ensures that your records can back you up for approval. Falling behind on bills and credit card payments happens. However, you should always keep the ball rolling to avoid rejection or lousy mortgage deals.
3. A Failing Credit Score. Regardless if you’re applying for a loan or not, a failing credit score isn’t ideal for any person. It’s essential to maintain a good credit score to ensure that you can get approved for the loan with great deals from the lender. Pay attention to all your current accounts and maintain them at good standing to further improve your credit score. Try to avoid closing an account during your application process even if you don’t use or need it. Although it’s great to clear out existing credit lines, the history in them could play a significant role in your loan’s approval and getting a better deal. Instead, make sure to close any disputes before applying for a mortgage to avoid any delays in your application.
4. Changing Careers. Loan officers will likely approve an application if the applicant has had a stable job in a single company for the last two years. Although it’s not a big deal most of the time, the time spent in the same company for two or more years can mean that the applicant is responsible and committed to what they do. Borrowers with shorter job histories or frequently changing jobs can appear as high-risk candidates, leading to application rejection. A steady income history will be favorable on your side and can land you good interest rates and dodge large down payments. It’s also best to maintain your source of income for now because lenders will check on your annual income.
5. Becoming Self-Employed. Starting a business or transitioning to self-employment may not be the best move for now. Although transitioning to being your boss is excellent, it may cost you your stable source of income which can affect your application. It’s better to start a new business later on when the loan is approved.

Home Buying With MidAmerica Bancorp, Inc

There are a lot of other things to consider when applying for a mortgage loan. It’s best to speak directly with your loan officer and learn about their company’s method of determining who qualifies for the loan or not.

Are you planning to buy or move into a new home? Hire the most trusted mortgage experts from MidAmerica Bancorp, Inc to help you out. Get a free mortgage quote by signing up on our website today or call us at (708) 237-4050.