25% of the Loan Applicants Make Mistakes
Realty Biz News reports that today studies show 75% of home purchase applications are approved. That means around 25% of the loan applicants make mistakes Being aware of possible missteps can speed up the process and avoid disapproval.
25% of the Loan Applicants Make Mistakes
Limited or No Down Payment
The most common mistake is making a minimal down payment or none at all. Putting 20% down on a $300,000 is a lot of money, but it’s always best for the down payment to be substantial. A low down means you will have to pay for mortgage insurance. If you face foreclosure due, the insurance provider protects the lender from a certain percentage of losses.
Mortgage insurance adds at least a few hundred dollars to your monthly payment. Typically, it takes a few years to build equity in an amount necessary to reduce or cancel the insurance.
Documentation Delays
In assembling your documents, a mistake would be copying or scaning only the front pages of a bank statement and missing the backs of the pages. You will need even blank pages or pages containing mainly fine print. Not making time for the paperwork leads to a risk of delays, ultimately resulting in an offer’s cancelation.
Not Checking Your FICO Credit Score
Checking your FICO Credit Score in advance can reveal errors in reporting while you can fix mistakes. Realty Biz News said “The three main credit reporting bureaus – Transunion, Experian, and Equifax – all offer free credit report copies. You can also get a free report on AnnualCreditReport.com, a government site.”
Making a Big Purchase Before Closing
Chris Turn says “In all the excitement of buying a house, you may want to splurge on new furniture, new appliances, or even a new car. However, most lenders will look at your credit one more time before the deal closes. You will have to explain why these establishments checked your credit and sign the respective documentation. You will also have to make a statement on whether the inquiry led to a new purchase or an additional credit extension.”
What was APR Again?
There are two different numbers associated with interest rates: the annual percentage rate (APR) and the mortgage rate. It’s a mistake to only focus on the mortgage rate. The mortgage’s other costs get you to the APR. These costs include insurance premiums, loan origination fees, and loan processing fees. The sum is equal to the real cost, the APR of the loan.
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