Although a lot of people do not realize it, you can actually get approved for a mortgage (check out Credible.com) even though you have bad credit. However, the amount you can get approved for will mostly depend on specific circumstances such as your and your spouse’s income and how much you can afford to pay every month.
Choosing the right home for you and your family can be quite dauntingf and time-consuming, however, that is only the first step that you’ll need to take. You’ll still need to get approved for the loan, you’ll need to learn everything there is about the entire mortgage process, and you’ll need to plan everything well.
All of these things are quite confusing and complex, which is why you might be wondering – are there some bad credit mortgage mistakes that I should look out for and avoid? Well, there are, and that is exactly what we’ll be talking about today. Let’s take a closer look at what you should avoid:
1. Not Looking at All of The Options
Just because a particular offer looks good, that does not mean that it actually is suitable for you. Hence, you’ll want to do a little digging and determine what your options are. Next, you’ll want to compare everything about those offers, and do learn whether or not you can actually afford it.
For instance, there are various companies such as this broker that can help you with finding the best deal in order to ensure that you have the best possible experience when it comes to obtaining a new house. So, you might want to consider hiring such a company to help you with your needs.
2. Mixing Up Pre-Approval With Actually Being Approved
When and if you get pre-qualified, the lending company is basically allowing you to have an estimate of how much money you can lend based on all the data you submitted. But, when you get pre-approved, it means that the company has verified the data you submitted and is offering you to borrow a certain amount – with interest.
Since you are shopping for a home, getting pre-approved is better, however, that is still not a guarantee that you’ll get the loan since the company will need to provide you with a final clearance. Additionally, they’ll probably check the information you gave one more time before finally giving you the loan – all of which will take some time.
3. Not Trying to Improve Your Credit Score
As mentioned earlier, it is possible for you to get a mortgage even though your credit is bad, however, that does not mean that you should not try and improve it. Hence, you’ll want to pay any overdue bills on time and try your best not to buy anything expensive before you actually purchase your new house.
4. Not Checking Your Report Several Times
While on the topic of your credit, you should know your credit score and report before you apply for a mortgage. This means that you’ll want to completely check your report and ensure that there are no mistakes on it. It is quite easy to do this since all you’ll need to do is order a free report from an agency.
When you are checking it, you might come across a mistake or several of them, and if so, you’ll definitely want to dispute it. If you do not find any mistakes, but realize that your score is really bad, again, try and fixing the problem a little bit before you apply for a mortgage with a loan company.
5. Telling Lies on Your Application Form
One of the worst mistakes that you can make is to exaggerate how much you earn when you are filling out the application form. Keep in mind, telling lies on such application forms is actually a federal offense, which is why you must avoid making this mistake at all costs. If the company figures out you have been lying to them, they can choose to make you pay the entire loan, which is something that you do not want to happen.
6. Avoiding The Lender
Besides lying on your application form, another thing that is extremely bad for you is avoiding your lender, ignoring their calls, as well as not reading the letters they send when you are late with the payment. Lenders might, in fact, help you keep your home if you are behind with payments, but if you do not talk to them, they won’t be able to know what is wrong. Hence, never avoid the calls and letters you get.
7. Not Inspecting The Home You Are Planning on Buying
The most expensive mistake you could make? Well, it is if you fail to ensure that the home in good condition before you actually purchase it. You’ll want to pay for a home inspection in order to learn whether there are any problems with the building such as leaks, mechanical systems failing, and broken appliances.
Naturally, there will probably be something wrong with it, however, you’ll know whether or not it is worth repairing the damaged or broken things or if you should simply look at another property. You can always ask your realtor for a referral when it comes to hiring an experienced home inspector.
Bonus Tip – Change Your Lifestyle
All lending companies love stability and profit, which is one of the reasons why you might want to change your lifestyle a bit. What does this mean? Well, it is a good idea to have the same job for at least two or three years before you apply for the mortgage and it is important that you also keep it until you are done with your payments.
As you were able to learn, there is a wide range of mistakes that you’ll want to avoid when taking out a mortgage with bad credit. And, if you successfully manage to avoid these mistakes, you can ensure that you obtain the property that will suit your needs, and more importantly, your budget.
Hence, now that you are aware of all the things you must avoid, you should not waste any more of your time. Instead, you’ll definitely want to go back to the beginning of this list and start with the first thing – which is looking at all of the options that are available for you.