In this article we’re going to cover the 5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make. If you’re interested in buying Los Angeles real estate or an Echo Park house for sale, lucky you for finding this article!
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Plenty of first time homebuyers in Echo Park, CA, that are not working with an experienced professional Buyers Real Estate Agent like myself may find themselves in trouble if they don’t read the 5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make.
- Do most first time Echo Park homebuyers know that the mortgage application process can take time to process?
- Are the many steps involved in the loan application process likely for people to make more mistakes?
- Can mortgage mistakes cost first time Echo Park homebuyers plenty of time and money?
That’s YES to all of the above.
We have now set the record straight that the entire mortgage application process is far from easy but the rewards of being well prepared and ready to buy with a pre-approved loan far outweighs waiting until the last minute! And, you’re more prone to make mortgage application errors or mistakes when going into an offer unprepared. On the other hand, it can be quite simple if you’re working with a talented and sharp mortgage broker whom you know and trust.
It always amazes me to see how much research people do prior to buying a new flat screen television. Yet, when it comes to getting properly prepared to buy one of life’s most expensive assets (a personal home), they’re somewhat okay going in blindly.
No need to worry: the upside is that a lot of these mortgage mistakes (or, basically “mortgage misinformation”) during the application phase can entirely be avoided by working with a talented and knowledge home loan expert such as Joe Tishkoff, a 31 year real estate lending expert with Skyline Home Loans in their Calabasas, CA offices.
Regardless whether you’ve bought and sold a number of Echo Park houses these past few years, or whether you’re a first-time Echo Park homebuyer, it is rather easy to make some of these mortgage mistakes (especially, if you weren’t aware some of these things were actually big things).
In order for us to learn from these mortgage mistakes and hopefully avoid them going forward, let’s have a look at the 5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make.
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Mistake #1: Not reviewing your credit report
A lot of people, especially first-time Echo Park homebuyers, tend to be quite nonchalant about their credit report. Is it perhaps the lack of understanding of how important credit scores are when applying for a mortgage loan? Unless you’ve got a fairly clean credit record, the financial institutions these days are unlikely to hand over any cash or at least not at the most preferable rates.
A credit score is calculated by looking at a number of financial statistics, such as your prior repayment history, new/old credit, balances outstanding in relation to your credit limits and available credit, the types of credit and the length of time you’ve had credit available, to name just a few. The better or “higher” your credit “score”, the lower the interest rate at which you will borrow; and subsequently, the lower the credit score, the higher the interest rate. Make sense?
If you were to stick a dollar amount on the difference between the two, I’m sure it could pay for a very nice international vacation, don’t you think?
Did you know that each of the major credit report agencies allows you to order a free credit report once a year? No kidding. Just visit www.annualcreditreport.com to order your free credit report. This is a legitimate site and not a sales site seeking to charge you fees to monitor your credit or prevent fraud from occurring.
And, why should you be concerned about checking out your credit report prior to applying for a mortgage?
Well, based on a study by U.S. PIRG, the Public Interest Research Groups, a shocking 80% of credit reports (yes, you read that correctly, that’s 4 out of 5!) contain serious errors. Holy cow!
In other words, unless you’ve addressed those errors several months prior to applying for a mortgage, your credit score will now be lower than it could to have been. And, guess what? If you had done your credit report homework before the mortgage application process or you’re planning to work with a talented loan expert like Joe Tishkoff , this won’t be an issue.
If you noticed a small mistake, no problem, go ahead and dispute it. See a ‘bad blemish‘ on the report? Time to start repairing it immediately before it’s time for the mortgage application.
Joe Tishkoff will be able to assist you in analyzing your credit history and help you create a viable plan as to how to pay off some of the outstanding debts. Figure out a way to repair your credit report and you’ll end up saving thousands in fees!
Make sure you have ample time to correct any issues. It’s wise to set aside about 4-6 months before you start applying for mortgages. After all, a good credit rating isn’t achieved overnight.
“The golden rule of credit is that you can’t get it until you’ve had it,” Says Joe Tishkoff, from Skyline Home Loans.
That little piece of paper is something you ought to know by heart, especially when it’s the ‘final check’ before the mortgage loan application. Plus, as first-time Echo Park homebuyers, this will save you a lot of stress waiting for the interest rate quotes from the financial institutions.
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Mistake #2: Using low or a zero down payment
Lenders tend to be of the impression that, “If homebuyers don’t have any skin in the game, why should we?” when referring to how much of a down payment they normally expect homebuyers to come up with. While I’m sure there are quite a few reasons why a bigger down payment is beneficial to first-time Echo Park homebuyers, here’s a short list of the 5 most important ones:
Ease of approval:
• A Large down payment is a great sign of borrower strength and informs the lender you don’t mind putting some equity into the property already, which will increase the odds of getting a mortgage approval. Besides that, in the negotiation stage of the bidding process, a bigger down payment will go a long way as well and help me help you get the seller to open escrow with us.
More favorable interest rate:
• With a preferably 20% or more initial down payment the financial institution will see its exposure reduced, as the so-called loan-to-value ratio (“LTV”) is lower. Lower rates over the life of the loan will save you thousands in interest as well.
Lower monthly mortgage payments:
• It doesn’t take a brain surgeon to figure out if your interest rates will be lower, that your outstanding monthly mortgage payments will be lower as well.
Reduce mortgage insurance:
• It normally takes a handful of years before some equity is built up in your home, depending on the type of loan. Keep in mind that the majority of the initial years’ worth of payments is made of interest. Ouch! At one point when your LTV is at 80% or below, you can look into adjusting the private mortgage insurance (unless you like paying an extra few hundred per month of course). Having more equity in the property, the financial institution is less at risk if you were to get into trouble repaying.
Avoiding negative equity:
• As the previous subprime housing crisis clearly has demonstrated, property values do fluctuate and if they were to start sliding, the odds of you getting into a negative equity scenario are small.
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Mistake #3 – Underestimating the impact of existing debt
Do you have any idea how much credit you have available to you right now? Most lenders will check your so-called debt-to-income ratio, as well as timeliness of your payments, types of accounts and overall payment history. Having too much debt when going into a mortgage application process is simply asking to be declined for a loan. There’s only so much credit a lender is willing to extend to you, which is why the consumer debt accounts for such a large portion of the credit score.
A lot of first-time Echo Park homebuyers don’t necessarily think everything through when applying for a mortgage loan. Financial institutions like Skyline Home Loans, on the other hand, will closely look at an applicant’s current outstanding debt, and try to discuss options to lower the debt or consolidate debt. They won’t allow the debt (i.e., car loan, credit cards, etc.) to surpass a certain percentage of the client’s monthly income, and working with someone like Joe Tishkoff will help guide you down the correct loan path tailored specifically just for you.
If there’s one lesson to be learnt when applying for a mortgage, try to pay off as much of your credit card debts and other types of debt before you start with the mortgage application.
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Mistake #4: Changing jobs mid-application process
It’s rather advisable to avoid interrupting one’s employment during the mortgage loan application. It really comes down to one word: stability. Financial institutions prefer to see a recent career history, which shows consistency. Unfortunately, changing jobs mid-way the process won’t necessarily kill all chances of getting the loan; the application process might just be (heavily) delayed, and you might need to bring forward some extra supporting documents to state your case.
Some might even argue there’s a big difference between a job change vs. career change during the application process. Joe Tishkoff is a whiz at making sense of these types of situations and seeing the writing on the wall miles ahead of time so the Echo Park homebuyer knows what to expect when applying for a mortgage loan.
Even if you feel horrible at your current job and you’re ready to tell your boss his future and where he ought to go, do not change jobs until you’ve closed on the home loan or at the very least discuss this openly with your loan officer before you make the offer.
Will it really be that tough for you to hang on a few more days/weeks until all the necessary paperwork has been signed, approved, received, confirmed, sealed, emailed and recorded? Hold your breath and keep your eyes on the prize.
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Mistake #5: Forgetting about total cost of homeownership
It pretty much comes down to managing expectations as a first time Echo Park homebuyer. How much house can you afford with your income? How much are the monthly taxes and insurance? How about basic maintenance, or unexpected maintenance? Are you aware that 1-2% of your property’s value ought to yearly be going towards routine maintenance of the property?
Financial institutions are very pedantic about their 30% rule, which states that total housing costs cannot exceed about 30% to 40% of that person’s gross income for most types of loan programs. Other programs allow a higher overall debt to income ratio so always first check with a mortgage professional such as Joe Tishkoff with Skyline Home Loans.
First time Echo Park homebuyers should get a pre-approval from Skyline Home Loans prior to the start of their home search, so they’ll know how much house they can afford. Ideally, they should not try to maximize that amount, as you should realistically calculate in some extra monthly expenses, like summer vacation!
Owning a home can be an expensive ordeal, once you start adding up all the costs, such as property taxes, utility bills, repairs, homeowner’s insurance, etc. I’m just saying it’s best to be prepared beforehand so you have a good idea about what your future expenses might look like.
A rule of thumb, try to spend less than 28% to 33% of your pre-tax income on housing costs (i.e. monthly mortgage payments, insurance premiums, home owner’s association dues, etc.).
5 Biggest Mortgage Mistakes First Time Echo Park Homebuyers Make
Closing thoughts
There’s no doubt about it that the mortgage application process can be a stressful one if you’re not working with a talented lending expert like Joe Tishkoff.
Unfortunately, most people are rather shocked when they’re first explained how their credit report reads. Not everybody’s financial health is as good as they believe it to be. That’s exactly why you need to check up on your credit history every year. As a general takeaway, if you would like a good credit rating, make sure not to get into more debt than you can afford (and make sure to pay it back on time). It does sound simple, however it’s not always easy.
In the end, if your mortgage application gets declined, there’s a great chance one or more of the above mortgage mistakes were likely the cause. And Joe Tishkoff is the man that can shed some light on the subject and help you get on the path to a loan approval.
Real Estate Expert Echo Park, CA
I’m a local Echo Park real estate agent and It would be my pleasure to help you find the perfect property to call home in Echo Park CA, or if you’re thinking about selling a house, condo, or multi-family building in, Silver Lake, Hollywood Hills, Los Feliz, Atwater Village, Glassell Park, Mount Washington, or Downtown Los Angeles, it would be a privilege to help you get top dollar for the sale of your property.
Lets chat sometime. 310-913-9477 or contact me.
