Common Mistakes People Make When Applying For A Mortgage
Whether you want to buy a house, rental property, or a vacation home, having the necessary mortgage financing can get you a step closer to your dream. However, with the volatile state of the housing industry, it can be difficult to keep up with the market trends and find suitable financial options. Moreover, you may fail to understand how mortgages work and their complex rules and regulations, resulting in higher interest rates or rejection of your mortgage application. To help you avoid some basic errors that could prove to be costly, Rowan Smith Mortgage Broker at City Wide Mortgage Services has put together a list of the most common mistakes people make when applying for a mortgage.
1. Not providing full disclosure
I always tell clients to share their full story and information with me, and I will package it up the best way possible for the banks. Often some clients think it’s innocent to omit certain data, which can be very upsetting to the banks when they find out later. For this reason, it’s best to tell me every bit of information, and I will inform them how I present the situation to the lenders.
2. Taking on new credit during the mortgage process
Once an application has been submitted, a borrower should not apply for any car loans, furniture financing, lines of credit, or significant credit cards. If the approval has been issued and the bank finds out that the financial position has changed materially (in their minds), they could pull the approval.
3. Going on vacation before the completion date of their purchase
When this happens, it often leads to a disaster! As the borrower gets closer to a purchase, there are several things they’ll need to attend to, like insurance, lawyers, movers, etc. Being away at this time is a terrible idea. Always be around during the two weeks leading up to the purchase of real estate.
4. Listening to what “someone else got” on their mortgage
Every person’s financial position is totally different. Subtle changes in a situation can result in very different outcomes, such as different rates and fees (if applicable). It’s best to let the professional broker tell you what is possible and not rely on what someone else got, no matter how recently, on their mortgage.
5. Changing jobs during the mortgage process
As attractive as it might be to take a new job, once approval is issued, a borrower should consult their mortgage broker before changing jobs. This is considered a “Material Change,” and lenders could pull the financing they agreed to provide if they deem the change to be significant or if the income structure is different. That is going from a salary of $60,000 to a commission structure that COULD make them $100,000 but only has a $30,000 base.
6. Only focusing on rate
There are many things to a mortgage, and the rate is the one that most borrowers focus on. However, the rate is only one element. There are portability concerns, penalties, fees, and many other restrictions that might be far more costly in the future than a 0.10% difference in rate. It’s essential to focus on the overall package and long-term plan to ensure a borrower has the right product.
To avoid these and other mistakes when applying for a mortgage, reach out to the experts at Rowan Smith Mortgage Broker - City Wide Mortgage Services. As a leading mortgage broker in Vancouver, BC, I have over twenty-one years of experience in banking and brokering. I co-own City Wide Mortgage Services with my three business partners, and we have helped clients find the right mortgage solution to ensure financial security. I offer a full mortgage service line, including home purchase mortgage, mortgage pre-approval, mortgage renewal or refinance, construction mortgage, private lending, equity mortgage, debt consolidation, and self-employed mortgage. And my services are extended to clients across Vancouver, Yaletown, Burnaby, Richmond, Coquitlam, Surrey, South Surrey, White Rock, Langley City, Fort Langley, Langley Township, Aldergrove, Abbotsford, Chilliwack, Hope, and the surrounding areas.