Buying a house is a big investment and, when done right, can be exciting! But the mortgage process can be a bit overwhelming if you don’t understand what you’re getting into or what you should avoid to prevent losing the home of your dreams.

 Avoid these ten mistakes when buying a house, and your mortgage process should go off without a hitch!

 

1.    Not Getting Pre-Approved for a Mortgage First

 

Before looking at homes, you should get pre-approved for a mortgage. Being pre-approved tells you how much home you can afford and tells sellers you’re a serious buyer. If you sign a sales contract before getting pre-approved, you might find you can’t get approved for the loan you need and can’t follow through on the sales contract.

 

2.    Making a Large Purchase

 

After you’re pre-approved, you should keep your financialsituation status quo. This means avoiding any large purchases. Whether youcharge the purchase on your credit card or withdraw money from your bankaccount, both can count against you when the lender finishes underwriting yourloan.

 

Instead of making large purchases, such as a car orfurniture for the house, wait until you close on the loan, then make yourpurchases.

 

3.    Accumulating Credit Card Debt

 

Lenders base your pre-approval on your debt-to-income ratio.This measures your current debts to your monthly income. Each loan program hasa maximum DTI they’ll allow.

 

If you accumulate more credit card debt after you get pre-approved, it could push your DTI too high, causing you to lose your loan approval.

 

4.    New Credit Inquiries

 

New credit inquiries signify that you applied for new credit. Lenders pull your credit again right before you close. If they see new inquiries on the report, it will raise a red flag, and they will need proof that you did (or didn’t) take out new credit. If you did, it could affect your loan approval.

 

5.    Moving Money Around after Pre-Approval

 

As a part of the pre-approval process, lenders verify the money you have for the down payment and closing costs. If you move this money around, it can put your approval at risk. Lenders want everything to be the same when you close as it was when you first applied for pre-approval. Avoid transferring funds until after you’ve closed.

 

6.    Not Understanding the Monthly Pay mentor Closing Costs

 

Buying a home is exciting, and hearing that you’re approvedis even better. But, if you don’t understand the full implications of the loan,you could be in over your head.

 

Review your Loan Estimate carefully. This is the documentyou receive three days after you apply for the loan. It will tell youeverything you must know about the loan, including the total cost and monthlypayment.

 

7.    Changing Jobs or the Way you Get Paid

 

As a part of the pre-approval process, lenders verify youremployment. Then, they’ll do it again before you close to ensure you’re stillemployed. Changing jobs or going from earning a salary to just commission couldput your approval at risk.

 

8.    Cosigning on a Loan for Someone Else

 

You might think you’re doing something good by cosigning on a loan for someone else, but it can hurt your pre-approval.

 

Even though the loan isn’t for you, the lender holds youresponsible if the primary borrower stops making payments. Because of this,your mortgage lender must include the cosigned loan payment in yourdebt-to-income ratio, which could risk your approval.

 

9.    Not Fully Disclosing your Financial Situation to your Loan Officer

 

You must disclose everything about your financial situationto your loan officer, including the things that aren’t reported on your creditreport.

 

Common examples of issues you should disclose includealimony or child support you must pay, past foreclosures or repossessions, or judgments you received from unpaid bills.

 

10. Not Shopping Around for a Mortgage

 

Finally, shopping around for the best rates and terms on amortgage is important. Your mortgage loan could last for 30 years, depending onwhich program you choose. If you don’t shop around, you could throw money awayby paying too much interest or excessive fees.

 

It’s best to get quotes from at least three lenders todetermine who offers the best deal.

 

Final Thoughts

 

Buying a house is a big decision. Make sure you avoid thetop mistakes people make when buying a house to avoid the risk of losing yourapproval. It’s best to keep your financial and employment situation the same aswhen you applied for the mortgage to avoid risking your loan approval.

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