Three Mistakes That Can Prevent You From Getting Your First Mortgage
If you are looking to buy your first home and you think that you have reasonably good credit, you may not even be thinking too much about the mortgage process yet. This can be a big mistake, though, as many first time homebuyers find out the hard way that they don't qualify for the mortgage they want. The following are three mistakes that can cause this to happen:
#1: Changing jobs right before you start looking
Mortgage lenders want to sign loans for people that have a steady income history since this increases the chance that the loan will be paid back as agreed. If you completely change jobs right before you start looking at homes, especially if the new job comes with a pay decrease, you may compromise your chance at a loan. Fortunately, not all job changes will affect you, but you may need to show the lender that you had a good reason to change jobs. Staying in the same field but changing to a different title, or changing to a new title in the same field can usually pass muster. Also, make sure you can show at least two months of unbroken pay to help prove that you can remain financially viable.
#2: Too many recent credit changes
Don't mess with your credit too much in months leading up to your mortgage application. Opening up a bunch of new accounts, especially revolving credit accounts, can be concerning to lenders. This is the case even if you aren't utilizing the credit because if you have a high borrowing ratio the lender worries that you may one day get into major debt. You also don't want to close too many accounts right before applying, since closing accounts can temporarily lower your credit score. The best course is to keep your accounts stable except to pay down any outstanding debts.
#3: Not having enough credit
Little to no credit sounds like a good thing because it means you have no debt, but it also means lenders have no way of knowing whether you will be reliable when it comes to paying off your mortgage. If possible, open up a small loan or credit card account 6 months to 1 year before beginning your home search, then make all payments on time. This shows lenders that you are reliable with credit. Otherwise, you may have to find a lender that accepts alternative forms of credit, such as letters from landlords or statements that you have paid your utility bills on time.
For more help, contact a mortgage lender in your area, like GRT VA LOAN.