Applying for mortgage loans can be difficult for first time and repeat home buyers alike. The process takes a lot of time and paperwork that trip up homebuyers on a regular basis. The most unfortunate ones end up getting disqualified by missteps. If you are looking for mortgage loans Singapore it’s best to be wary of these 10 common mortgage pitfalls.
1. Trying to qualify for the more expensive houses.
Homebuyers who attempt this will often sign up for interest only or payment option adjustable rate loans. These loans are normally not risky, however, when homebuyers use them to qualify for a house that is out of their means, the possibility of a mortgage value higher than the actual value of the home is very real. Best to exercise caution and stick to feasible loans.
2. Signing another person’s loan.
Doing this seems right when helping someone out financially but be aware that co-signing on a loan legally binds you to a contract. Should your co-signee default on loan payments, expect the lender to come looking for you.
3. Making late payments.
Paying late keeps you from getting agreeable terms and rates. You will also be penalised by late fees. As a rule of thumb, always pay on time.
4. Avoiding full disclosure of your financial history.
Debts and how buried you are in them are sensitive topics. But do not try to conceal your full financial history from your mortgage broker as doing so keeps you from getting the most ideal loan.
5. Abusing the use of credit cards.
Credit cards only work for you when balances are kept at a minimum and paid off on time. Credit card debts can have a negative effect on your credit report as well as on your chances of qualifying for a mortgage loan.
6. Purchasing big before your mortgage application.
Getting big purchases out of the way before your loan application can disqualify you because it diminishes your capacity to pay off a loan in the eyes of a lender. It is better to wait until after completing your mortgage application for any major purchases.
7. Going for the lender with the lowest rate.
The mortgage rate is only a fraction of your concern when getting a property loan. There are also origination fees and APR. Before you sign a contract with your lender, make sure that those aspects also work for you.
8. Not utilising loan pre-approval.
Pre-approving for a loan gives you more leverage by giving you the potential to be a cash buyer. Getting pre-approved can manifest into thousands of savings and getting entertained by realtors.
9. Forgetting about closing costs.
Closing costs can range from 2 to 7% of the total selling price of a home. Make sure to ask your lender for an early estimate to avoid an unnecessary financial fix.
10. Delaying on paperwork.
Just like late payments, delayed paperwork works against you. Submitting late can mean getting disqualified for low rates and getting delayed closing dates. To avoid further inconvenience, complete and submit paperwork on time.
If you have committed any of these mistakes before, remember that’s it’s not the end of the world for you. Through a qualified financial advisor Singapore, you can avoid these mistakes next time you apply for a mortgage loan.