Applying for a loan to buy a house can be a much more difficult process than people expect. It typically involves evaluating a lot of information and scrutinizing your fiscal fitness for such a sizable loan.
While factors such as a solid credit history and stable employment can make it easier to get the mortgage you want, there are factors that can make it more difficult.
Disputing your credit report
Your credit report will be critical in determining whether lenders will approve your application for a mortgage. If you are disputing an error on your credit, you should know that it could affect this application.
As this article from Quicken Loans notes, credit report errors are unfortunately common. In fact, about 20 percent of Americans have errors on their credit report. As such, dealing with an inaccurate report is not unusual. That said, it can still affect your mortgage because a dispute will temporarily inflate your report. This can make lenders less likely to approve an application. Additionally, as a consumer of credit you should be aware that you are entitled to one free copy of your credit report every twelve months from each of the three nationwide credit reporting agencies. it is advisable to check for inconsistencies or errors in your credit report in order to prevent issues from arising when applying for credit for large purchases.
Assuming you don’t need a down payment
Perhaps the last time you purchased a home, lenders told you that you could do so for no money down. Or maybe you have heard of other people qualifying for loans without having to make a down payment.
However, most people will need a down payment. The housing market is very different today than what it was a decade ago, and banks are much less likely to approve a loan without money down. And while there are types of loans that do not require down payments, they are reserved for specific types of borrowers including veterans and those looking to buy in a rural area.
Pursuing the wrong type of loan
There are different types of loans, and pursuing one that doesn’t fit your needs or for which you do not qualify can be a costly misstep. There are many factors to consider when choosing a mortgage loan, so it is important to understand which might be best for you.
Whether you are seeking your first or second mortgage, or you wish to refinance your mortgage, having legal guidance to help you navigate this process can be valuable. An attorney can review your mortgage and help you make informed decisions as you pursue the home you want.