Moneyadviceblog » Loans » Biggest Mistakes People Make While Taking Home Loans

Everyone wants to buy their dream house. But, buying a home is not as simple and easy as you think. It is a considerable investment that requires months and months of preparation. You have to find out your requirements. What kind of house do you want? A large and expensive one? Or, a small but comfortable one? And, then comes in the nightmare called home loan.

Once you start your home loan journey, you will find that it’s very unnerving. However, with Sunland Capital Mortgage Corporation, you can rest assured as they can get your home loans approved even when you think it’s impossible.

However, if you want your home loan project to go smoothly, here are some mistakes you should avoid.

Mistake No.1: They Make Too Many Applications

Close-up of a home loan application 1223438 Stock Photo at Vecteezy

When a person applies for a loan, this information gets recorded on his or her credit file. But what most people don’t know is that it will never say whether your loan application was approved or not. And, if you have applied to several lenders, they will think you have been turned down by all the others. Eventually, they will get nervous and reject your application.

Mistake No.2: Starting the Home Loan Process Too Late

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When you embark on the home loan process, you have to follow the right steps. For instance, many recommend getting your financed approved first and then start your home search. Mortgage brokers will have ample time to assess your needs and get your application quickly pre-approved. However, people often begin the process backward. That is, they put forward an offer on a home but end up being rejected.

Now, it is indeed admissible to look for a home first but isn’t it devastating when another buyer (with pre-approval) comes in and their offer is accepted.

Or, let me give you another scenario: Suppose you have miraculously come across your dream house and you start looking out for mortgage lenders where you can get the best rate. But, finally, you end up being rejected due to your partner’s less-than-perfect credit score or your high debt-to-income (DTI) ratio.

This is why it is recommended to avoid this heartbreaking step and get your approval going 40-60 days before shopping.

Mistake No.3: Buying More House Than Necessary

Facade, Great Chalfield, Manor, House, Uk, Building

Falling head over heels in love with a house that you can barely afford is also considered as a mistake.

As a buyer, you can only attain success in your home project only when you go for what you can afford, figure out how much you can really put into a down payment and then stick to a proper plan and follow the right steps (as mentioned above).

Purchasing a home is one of the most significant investments that a person can make and this is why it is said to spend only 28% of your gross income on housing. So, even if your application for a high amount of loan was approved, it doesn’t mean that now you can live a lush life.

If you want to avoid any financial problems, I advise you to live within your means. What kind of financial problem, you ask? Well, suppose you bought the largest home in a locality. But, something unexpected happens and you need to sell the property. Remember that markets can change and selling that “luxurious house” won’t be that easy.

Mistake No.4: Not Taking Insurance

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With the alarming increase in the prices of properties, insurance has become very popular in today’s world. However, keep in mind that it’s not compulsory (even though some finance companies tend to force buyers to pay extra for the insurance premium). But, as life can be so unpredictable, don’t you think it’s better to secure the future of your loved ones?

So, what’s exactly a home loan insurance?

Also known as a mortgage insurance, it refers to a scheme where in case of any unforeseen situation such as the death of the borrower, the insurer will settle the outstanding home loan amount with the lender or the bank.

  • A home loan insurance is vital for borrowers as it saves their families from financial distress and protects them from going homeless.
  • A home loan insurance is also crucial for lenders as they don’t want their loans to turn into bad debts.

So, now that you know what kinds of mistakes you should avoid, are you ready to experience the journey toward home ownership? If yes, you can contact Sunland Capital Mortgage Corporation.