Mistakes People Make when Applying for a Home Loan [in 2024]

You do not want to make these mistakes when you are applying for a home loan because qualifying for a mortgage is not an easy thing... Some lenders follow certain criteria before giving borrowers the financing they need for purchasing a property. As a borrower, you should carefully prepare for your mortgage application. One way of doing that is to avoid mistakes that might reduce the amount of financing you can qualify for, increase the interest rate on your mortgage or even cause a lender to reject your application.

00:00 Mistakes People Make when Applying for a Home Loan [in 2024]
00:13 1. Mistake Number 1 Eating Out
02:06 2. Mistake Number 2 Not Viewing Enough Properties Before You Make An Offer
03:32 3. Mistake Number 3 Not Showing Up To The Building And Pest Inspection
05:50 4. Mistake Number 4 Misunderstanding The Real Estate Agent’s Role
07:24 5. Mistake Number 5 Understanding All Costs Involved With Purchasing A Property

Here are the most common mortgage mistakes that you should avoid if you want to secure a lender’s approval:

Taking on additional debts
Racking up debt before applying for a mortgage will increase your debt-to-income (DTI) ratio – how much debt you are paying off compared to how much money you are making – which is one of the factors lenders are looking at to measure your ability to make mortgage repayments. If you have a DTI higher than six times your income (6 DTI), you will be considered a risky borrower.

Missing bill payments
Your payment history makes up 35% of your overall credit score. In fact, just one late payment can make your score drop by 50 points or above, depending on the circumstances. Like DTI ratio, credit score matters to lenders. The higher your credit score, the lower your risk will be in the eyes of lenders. As such, it is best to work on improving your score before getting a mortgage.

Overusing credit cards
Like making late bill payments, exceeding your credit card limit or swiping your card too often can also affect your credit score.

Shutting down a credit card account
If you have huge credit card debt, closing an account will not necessarily improve your credit score. Yes, there are situations where closing a credit card account is a smart move. However, it will not do you any good if you need a mortgage. If you get rid of a credit card, thereby reducing your level of available credit, your debt-to-credit ratio could rise while your credit score could drop.

If you have no credit at all, find out in this article how you can apply for a mortgage.

Changing jobs
A history of steady employment (for at least two years in most cases) is a key qualification item during the mortgage application process. If you change jobs within the same field and secure the same or higher level of income, you might not encounter any problems. But if you are moving into another career field, or if your income decreases from your previous position, it might cause lenders to reject your application. If possible, postpone your career changes until you have received financing. But if not, discover how you can get a mortgage with a new job.

Making large purchases
If you buy something big, such as a new car or appliance, that can deplete your savings. Remember that one of the things that lenders require from borrowers is to have genuine savings. When you are buying a property, you will need some savings to pay your down payment, closing costs and insurance. Even worse is when you have to take out a loan or swipe a credit card to make a large purchase, because if you cannot pay the full bill on time, that could affect your credit score.

If you want to qualify for a mortgage, it would be best to save as much money as possible and try to reduce your financial obligations beforehand. An additional tip is to consider delaying large purchases until after you have secured your loan.

Depositing a large amount of money
Your relatives can help you pay your down payment, but there are rules relating to down-payment gifts.

Going guarantor for someone’s loan
By being a guarantor, you will become partially responsible for that loan. If the borrower defaults on payments, it could make your credit score drop substantially.

DISCLAIMER:
This video offers no Legal, Financial and Taxation advice, and the information contained is general and does not take into account your personal situation. The Listener acknowledges, consents and agrees to the viewing of the content presented on the Channel is subject to the full Disclaimer (below) and agrees to be unconditionally bound by this Disclaimer.

[changemoney]

This THEE best video I've watched about buying a property. Short and concise and very impactful.

[nondo.]

Great tips guys, you voices are being drowned by the music though 😔

[patriciocastro]

You guys are legends. I'm currently in research mode to find my first home and you guys have helped alot! I live in Sydney so this is definitely a gem find..

[dennisguinzo]

Wish i have known you before I decided to go though what ive got now . You guys made me feel so confident that you can give the best advice. Im currently in the process of building and pest inspection on the 6th Jan. I feel like pulling out and starting all over again under your service....

[leonel]

Great content guys, about to buy my first home and your videos have really helped me along the way
Thank you so much!
Subscribed!

[Dylan-jftu]

quality channel, great advice is hard to come by.

[lchave]

Being a sole trader and getting finance is a nightmare

[josealejandro]

The best way to get a approval from the bank is to withdraw cash from your account and don't use your card to spend as they can't track anything. The banks has now eased on lending. Any one can get a loan these days.

[khushwinder]

Hey mate ! Really good stuff to watch n keep in mind .i would like to ask one question “what is latest news about 50k grant for first home buyers and does it have any borrowing limit and can one buy property anywhere in Brisbane ?

[imakevideos]

haha, my grandad is a building and pest inspector. haha

[dhurbasherchan]

What about people buying cigarettes? How are their application looked at?

[lorenavincent]

Why do people think their videos need a loud annoying music?