As one of the best mortgage companies Houston has to offer, at HomeStart Capital we come across many cases where a loan approval becomes difficult to obtain. These difficulties could be avoided if borrowers had been informed in advance.
Here are the four most common mistakes during the purchase of a home that in most cases could easily be avoided:
1) Making an offer on a property before being properly approved. Many people start the home buying process by looking at properties, then going to a bank to get a mortgage rate quote and receiving a “pre-approval letter” without showing any documentation to their Loan Officer. This is a common mistake since most lenders provide these letters prematurely. Last week I wrote an article about the proper way to pre-approve a loan; you can find it in our HomeStart Capital Blog.
How to Avoid it
The first step of the home buying process should be to meet face to face with your Loan Officer, bring all the documentation requested and make sure to answer all their questions. In most instances, brokers or bankers like HomeStart Capital can be more qualified to provide a true pre-approval than a bank employee because they have to be a licensed mortgage consultant, pass more tests, and attend continuing education courses, bank employees do not have to be licensed.
2) Quitting or Changing Jobs Many people change jobs before or during the loan process. This mistake could get your loan denied. Especially if you go from a W-2 employment with a fixed salary to self employed. Loan guidelines require at least two years of self employment history, therefore this scenario would be an automatic loan denial. Even changing regular jobs frequently can be a negative factor to an Underwriter. Job stability is one of the most important elements of any loan.
How to avoid it
There are exceptions to the rule. Unlike the case mentioned above, if you have been self employed for many years and you start a W-2 job where your income is consistent, you would only need a signed job contract and the first pay check to be approved. For more information go to our HomeStart Capital blog or call 713 275 2785 to speak with one of our Mortgage Professionals.
3) Not using a Realtor. Many buyers feel that they can look for their own home and negotiate on their own behalf. This can be a very costly mistake. Real Estate Professionals are often underestimated and under-appreciated. I am not going to lie, not all Realtors are created equal, there are many professionals in most areas that are very qualified negotiators. A good Realtor knows the area and the market trends at a much deeper level than an average consumer. A good Realtor can represent the buyer at a much higher level and provide invaluable advice before making a final decision.
How to Avoid it
As the owner of a one of the best mortgage companies in Houston that has been completely built on referrals, I am a true believer that the best way to find quality people is through referrals. I personally only do business with people who have been referred to me by colleagues whom I respect, I often advise all my clients to do the same. I would also recommend selecting a Real Estate Professional that is an expert on the area that you have selected. Market trends and detailed advice about a specific neighborhood can only be provided by a person who is updated and currently active in those areas. And finally, keep in mind that Realtor fees are paid by the seller, so as a buyer, you have nothing to lose by using their valuable services. If you would like a Realtor Referral please call 713 275 2785, we have relationships with some of the best Realtors in each neighborhood in Houston.
4) Making a major purchase before closing on the home purchase Many people get so excited before or during the purchase of a home that they start buying furniture, new appliances, a new vehicle and/or other major purchases. This mistake could cost you the final approval, even after you have been properly pre-approved. Any major purchases done before and during the loan process have to be counted against your ratios before closing the loan.
How to avoid it
Once you have started the loan process for the purchase of a property, try to avoid any major purchases until the loan has been completely closed and the keys of that home are in your hand.
If you absolutely need to purchase a new vehicle or make any major purchase during the approval process, please consult with your professional Mortgage Consultant so he/she can take the future payment in consideration, calculate it on your ratios, and add it to your loan application for underwriting approval.
If you have any further questions about any of this advice, please call Eduardo Adame or one of our expert licensed mortgage originators today at (713) 275-2785 or visit us at www.homestartcapital.com.
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5959 West Loop S #411
Bellaire, TX 77401
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