Owning a house is a great achievement for many people. It is also a great source of pride for many parents as it hallmarks your role as an able provider. While many people are able to make this dream come true, others find it to be challenging. Before you are eligible for a mortgage loan, the lender has to take a fine toothcomb through your financial history.
While some people make an effort to put their best foot forward, some simple oversights often prove to be their undoing.
Carrying too much debt on your cards
Regardless of your income, you should strive to keep your debt utilization level on your cards low. Preferably, you should hold it below 30% if you want to apply for a mortgage. Too much credit utilization leads to a low credit score, which could hurt your chance of qualifying for a loan.
High credit scores — over 700 points — ensure that you get affordable mortgage rates in Phoenix. Primary Residential Mortgage, Inc. noted that carrying too much debt increases your likelihood of defaulting on your loan payments, and lenders are quite wary of such occurrences.
Failing to pay your bills on time
Mistakenly, many people think that it is harmless to pay their credit card debts a few days late every month. In their mind, they presume the biggest crime would be a total failure to service the debt. While the latter is true, late payments also count against you in the end.
As most services are automated, the system applies the necessary punishment and penalties as soon as the deadline lapses. Hence, delays in remitting your payments could lead you to incur massive fines and penalties. It also leads to dip in your credit score, which leads to high-interest rates on loan. If you’re having trouble keeping deadlines, you can choose to make automatic payments from your bank account.
A mortgage application is a delicate process that requires a considerable amount of smarts and planning. By keeping your debts low and paying them on time, you increase your chance of getting the best deals.