Buying your first home can be both exciting and rewarding. But before you go ahead and get that home loan, it’s important to do your homework and know what you’re getting into. Scroll down and keep reading to learn how to avoid making mistakes that might disqualify you from getting a home loan.
Coming in with Debt
Lenders look at your debt-to-income ratio before offering a mortgage in order to determine whether or not you can afford a home loan. Pre-existing debt makes it harder to qualify for a home loan. Avoiding getting into debt as much as possible will make it easier for you to qualify for a home loan. Many first-time home buyers might have credit card debt, debt from big purchases like an automobile, or student loan debt. While it’s difficult to qualify for a loan with student debt, there are still ways you can secure one. If you have high student loan payments but a low amount of other debt and a decent income, it’s likely you will be able to secure a home loan.
Changing Jobs Before Applying
Many first-time home buyers make the mistake of changing jobs right as they apply for their home loan. Changing jobs makes your income less predictable, and makes you seem like a bigger risk to lenders. Many lenders want to see at least two years of reliable income on a mortgage application. If you change jobs from a salaried position to one based on commissions or bonuses, become a contract employee, or move to a completely different industry or position, your mortgage loan could likely be delayed. Although it’s not impossible to get a home loan when taking a new job, trying to keep a steady job through the loan application process is your best bet.
Not Saving Enough for a Down Payment
Another mistake first-time home buyers make is not saving enough for a down payment. When a lender considers your loan application, they want to know that you’re committed to paying your loan. Most lenders expect a down payment of 20 percent, but some accept 10 percent down. If you don’t have enough cash saved up front, it’s likely you could be disqualified from your loan.
If you want to make sure you qualify for a loan when buying your first home, it’s important to avoid these pitfalls. By making sure you avoid them, you’ll increase your chances of being more successful when you apply.
Here’s another article you might like: Don’t Buy a Home Before Considering These Factors
