Some Common Home Mortgage Loan Mistakes

Most Americans dream of owning their own home. This is an innate desire that many of us nourish. Even after witnessing the 2008 housing industry crash that led to millions of foreclosed homes, the big American Dream lives on. Owning one’s own home is a deeply emotional matter and everyone deserves to see this dream turn into a reality.

The journey to home ownership may be a very emotional one, but it is full of financial implications as well. A lot is at stake apart from one’s emotions and finances, especially for those who have decided to buy their first home, the process can be very challenging.

Getting a mortgage loan for your first home is not easy. It can be complicated and time consuming, and is one of the most important steps towards the dream of ownership. Ample planning and preparing beforehand can make the process much smoother and faster. Let us see some of the common mistakes that first-time homebuyers end up making.

Overlooking the credit scores

Before applying for a home mortgage loan, check your credit scores. A low credit score can hit your mortgage interest rate, or worst, keep you away from the loan itself! Take steps to improve your credit score at least 6-8 months before you start looking for a home loan.

A new credit along with the mortgage

During the mortgage-application process, avoid taking out any additional credit such as an auto loan or a new credit card. It would increase your liability and lessen your eligibility for a mortgage loan. Even the most affordable home mortgage loans will be hard to fulfill if your liabilities keep on increasing.

Not weighing the total housing payment

It is important to factor in expenses such as principal, interest, taxes and insurance into a mortgage payment. All these expenses must be included while estimating the total housing cost.

Not getting your assets seasoned

Lenders as well as banks want to be reassured that borrowers can make regular monthly payments. Unless your bank statements show that you have had sufficient money in your account for months, they might not be convinced.

Changing  jobs

A steady income from stable employment is another key to obtaining a home mortgage loan. Underwriters check if you have a stable income and job. Avoid job-hopping before applying for a loan. A career change should be out of the question.

Not getting pre-approved

Before applying for a home mortgage loan, make sure you are pre-approved for one. This is like a written commitment from the lenders that will tell the sellers that you are serious about buying a home.

Not looking for lending options

Shop around and check for lenders that offer the best and most affordable home mortgage loan to you. Comparison-shopping is the key to the best mortgage rate.

Not understanding your loan documents

Last but not least, it is the borrower’s responsibility to read and understand the terms and conditions in the loan document. It may be time consuming, but it’s better than signing up for something you do not agree to.
Avoiding the above mistakes can make your journey to home ownership much smoother and hassle free. Additionally, partnering with professional lenders can help first time home-buyers a lot.

I was burned by my first lender and had a foreclosure. How can I trust a new lender?

During the recent recession,1st Alliance Lending LLC millions of Americans experienced a foreclosure or short sale of their home.  Allegations have since surfaced that some lenders unjustly delayed or denied mortgage modifications that would have allowed thousands of these Americans to be spared devastating foreclosure or short sale. If this describes your situation, it is understandable that you would be hesitant to work with a new lender, although you likely want to achieve the American dream of home ownership.

You may fear that another lender will set you up for failure, so they can profit from fees. Although your fears are understandable, keep in mind that not all lenders partake in this hideous behavior. You CAN find lenders that are conscientious, with employees who genuinely want to help their clients, not hurt them. Here are some tips for searching for a trustworthy lender, who can help you return to homeownership.

Ask for referrals
Do you have friends or relatives who can provide you with their story? Maybe they have worked with a lender they trust and can pass along that lender’s name. Consider asking a trusted real estate agent for a referral. Real estate agents work with both lenders and homebuyers on a regular basis. They can give a good opinion of which lenders are trustworthy. Other experts that may be able to help you in your search are accountants, financial advisors, and attorneys.

Check references
Check business references to find out if the lender is reputable. The Better Business Bureau (BBB) is a great resource. You can discover what other homeowners are saying about the lender. You will also want to verify the lender is authorized to conduct business in your state. The NMLS Consumer Access is a free service for this verification.

Another option is to check professional rankings. Consider looking at the website for the lender. Do they provide testimonials? What is their business philosophy? Are they engaged in the community? Get a feel from their website as to what kind of company they are. Are they vested in the community or just out to make money? Look at the history of the company and what they have been in the news for.

Interview more than one lender
Take the time to interview more than one lender. Do they treat you as a person or as a way to make more money? Will they guide you with your home purchasing experience or will you be just another number to them? Make sure you feel comfortable with the lender before committing.

At 1st Alliance Lending we genuinely want to help people achieve sustainable loans. We are working to rebuild communities and are recognized for the thousands of people we saved from foreclosure during the recession. We have a conscience. We provide personal service so you can achieve a successful mortgage long into the future. Contact us to learn more about partnering with us for your new, successful mortgage.