What Can Derail Your Home Loan?

Buying a home is among one of the biggest financial decisions you will ever make, and securing a mortgage is a crucial step in that process. However, many borrowers unknowingly make mistakes that can derail their loan approval or result in higher costs. Here are some common mortgage mistakes to avoid to ensure a smooth home-buying experience.

1. Making Big Purchases Before Closing
Lenders monitor your financial activity until your loan closes. Making large purchases,
such as buying a car or new furniture, can increase your debt-to-income ratio and
jeopardize your mortgage approval. It’s best to wait until after closing to make any major
purchases.
2. Changing Jobs or Income Sources
A steady income is essential for mortgage approval. If you switch jobs, become self
employed, or experience a reduction in income during the loan process, your lender
may reconsider your application. Try to maintain stable employment until your mortgage
is finalized. If a change is unavoidable, call your lender FIRST before making the
change.
3. Skipping Mortgage Pre-Approval
Many homebuyers make the mistake of house hunting before getting pre-approved.
Without pre-approval, you won’t know how much you can afford, and sellers may not
take your offer seriously. Pre-approval gives you a clear budget and strengthens your
negotiating position.
4. Ignoring Closing Costs
Beyond the down payment, you’ll need to cover closing costs, which typically range
from 2% to 5% of the home’s purchase price. Not budgeting for these expenses can
lead to last-minute financial stress and may delay your closing.
5. Opening or Closing Credit Accounts
Taking on new credit, such as a credit card or loan, can impact your credit score and
debt-to-income ratio. Likewise, closing old accounts can lower your available credit and
affect your score. It’s best to avoid any major changes to your credit profile during the
mortgage process.
6. Failing to Provide Required Documents Quickly
Lenders require various documents, including tax returns, bank statements, and pay
stubs. Delays in submitting these documents can slow down the approval process or
even cause your loan to fall through. Stay organized and respond to lender requests
promptly.
7. Underestimating the Importance of a Home Inspection
While a home inspection is not always required, skipping it can be a costly mistake. An
inspection can uncover hidden problems that might affect the value of the home or lead
to expensive repairs down the road. Protect yourself by ensuring a thorough inspection
is done before closing.
8. Overextending Your Budget
Just because you qualify for a certain loan amount doesn’t mean you should borrow the
maximum. Overextending your budget can make homeownership stressful and leave
little room for other expenses. Stick to a comfortable budget to maintain financial
stability.
Final Thoughts
Avoiding these common mortgage mistakes can help you secure the best loan terms
and prevent unnecessary stress during the home-buying process. By planning ahead,
staying financially stable, and working closely with a trusted mortgage professional, you
can ensure a smoother path to homeownership. If you’re ready to apply for a mortgage,
take the time to educate yourself and make informed decisions—your future self will
thank you!

When you are purchasing a home or looking for a new mortgage, call Ruth. Ruth
Schoenherr is a mortgage broker who will help you find home loans in the Clearwater
and Tampa Bay area, and serving all of Florida. For more information, go to her web site at www.ClearwaterMortgageBroker.net or call at 727 447-2418.