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How to Avoid the Common Mistakes During the Loan Process

  • Shop Around for a Mortgage and Get the Right Loan

Decide what loan is right for you. If you intend to buy a bigger house in a few years, an adjustable mortgage may be the right one for you, but if you intend to stay in your home longer, you should probably opt for a fixed rate. You'll pay a higher rate, but you won't be subject to "payment shock" that sometimes comes with some adjustable-rate mortgages (ARMs).
Your choice of a lender and type of the loan may influence not only your settlement costs, but also your monthly cost of your mortgage loan. Do your homework and compare different programs available on the mortgage market.

  • Do Not Think Pre-Qualification Means Pre-Approval

Pre-qualification is just a quick check based on the financial information an individual provides.
A pre-approval, on the other hand, means a mortgage professional has checked the employment history, verified funds, bank statements, payment stubs, savings and checking accounts, studied an individual's credit record and so forth.
Getting pre-approved rather than pre-qualified saves a lot of trouble in the home buying process.
A pre-approved Buyer's offer is always stronger and a reasonable Seller prefers it.

  • Apply Early for Pre-approval and Get a Copy of Your Credit Report

Many people have debts on their credit reports that they don't even know about, but need to be corrected. That's why it's always a good idea to get a copy of your credit report as soon as possible and apply early for a mortgage pre-approval.
Request a free copy of your credit report by visiting www.annualcreditreport.com. All Americans are now entitled to a free credit report from each of the three nationwide credit reporting agencies, Experian, Equifax, and Trans Union.

For more info on your credit score and how to improve it go to: www.myfico.com

  • Get a Lock-In Rate in Writing

A mortgage professional can tell you that a rate will be locked in, but such talk won't help you at closing if the rate has changed and you've got no written proof of the previous arrangement. "Locking in" your rate or points at the time of application or during the process of the loan will keep the rate and points from changing until closing of escrow process.

  • Get a Written Good Faith Estimate

Within 3 working days after receipt of your loan application, your lender is required to provide you with a written good faith estimate GFE of closing costs. You may want to consider requesting a GFA from a few lenders before submitting your application. With a few GFEs to compare, you can educate yourself regarding the costs of your transaction.

  • Do Not Make Any Large Purchases

You can buy family room furniture for your new home, hi-fi stereo system or your dream plasma TV after you close the deal.

  • Do Not Change Jobs
  • Do Not Switch Banks
  • Do Not Move Your Money Around
  • Do Not Accept New Credit Cards
  • Do Not Pay Off Existing Accounts Without Your Lenders Request

All this can negatively impact your loan approval.