Mortgage is a loan that can help you finance your property purchase. With the help of a bank, a lender, or the government, anyone in the country has the power to finally own their dream home.
But getting a mortgage is not easy. Aside from filing those important application forms, you also have to make sure that your financial history is clear and impressive. The bank or the lender has to be assured that you are the type of person who’s honest enough to pay and has the financial capability to do so. Because of financial neglect and complete disregard to the process, some people fail in getting mortgage from any bank or from a lender.
To help you avoid this mishap, we made a list of the most common mistakes that people do when they are trying to apply for a mortgage.
1. Failing to get preapproved
Of course, you wouldn’t get mortgage if you fail the preapproval stage. In the Philippines, you have to submit bank statements, proof of income, income tax return, and your proof of employment for this phase. Failing to comply will make your chances of getting a home loan thin.
2. Not figuring out how much you can afford
Yes, we all dream of the white picket fence house located at the most glamorous location in the Metro. We all dream of a condominium unit where you have access to the most important places in the city. But can you afford these properties? Do you think that you can pay off the mortgages of these luxury properties. Choosing a property that’s a bit too much for your finances is a mistake. Consider your finances first before finding the right property. Or better yet, save up so that you’ll be able to own the property that you want.
3. Bad credit score
Credit score is a factor used by lenders to determine if you are worthy of a loan. A bad credit score means that you missed some payments, faced foreclosures, or even bankruptcy. The lower the credit score, the least chances that you are getting a loan. What can you do is to regularly check your credit score, pay your credit bills on time, and pay debt.
4. Job hopping
Yes, even your employment can affect your loan status. As mentioned, the lenders would want to be assured that you are capable enough to pay off that mortgage. It wouldn’t help on their eyes if you keep on hopping from one job and another. It shows that you’re a bit irresponsible and does not have any long term goals. Make a career shift after you pay your mortgage.
5. Not studying your options
It’s a huge mistake to just say yes to any bank who approves you. Shop around first. Compare rates and interest. You can ask for the help of a mortgage broker to learn more on how you can compute your finances.
6. Opening a new credit line or excessive charges
Creating a new credit line or overspending using your can hurt your loan application. This can affect your credit score and increase your debt that can lead o disqualification. Stop spending until you’re able to close down that mortgage deal.
7. Lying
Little lies about your employment status, credit score, and bank statements, wouldn’t hurt right? WRONG. Stop embellishing stories to your application. Lenders have methods in which they can figure out if there’s any inconsistencies in your application. Be truthful to the lender and go through the whole application as legal as possible.
8. Not reading your documents
Reading your application documents may be a bore, but it can definitely save your appeal in the long run. Check if there’s any inconsistencies in the documents or if there are more documents that you have to get.
9. Not asking for help
It wouldn’t hurt if you ask for help. If you know someone who’s an expert in mortgage applications, then do not hesitate to contact them. Or hire a real estate lawyer or accountant. These people can help you finance, choose the best bank/lender, and get the loan that you truly deserve.
10. Neglecting bases
This is for people who are married or in a relationship. It’s very important that you and your partner make a contract that stipulates what will happen if the two of you are going to break up. Not that we think that you guys will, but sometimes neglecting to do paperwork in important transactions, such as buying property, during your relationship can result to some unfortunate situations.
The key in getting a good mortgage is being financially responsible. Document your finances for a year and make sure that you won’t overspend. And of course, be truthful on what you put on those application form. Lying won’t get you anywhere.
