Working with a mortgage broker in Newcastle is the best way to avoid losing money or getting a raw deal on your mortgage. However, some applicants want to save by not involving a broker. While this can be catastrophic, you can still prevent some future problems by looking for and avoiding the following red flags.
Credit issues
You give your lender the permission of pulling your credit score when you file your application. If your credit score is too low, you will struggle to get your application approved. If you do gain approval, you will potentially get locked into a higher interest rate. If you have a high credit score, you will get the lowest loan rates.
Credit issues are the most common issues you can find with loan applications. Credit is the first problem that applicants face and most of the time, they do not realise it, especially if they had a divorce, bankruptcy, or a bad year in their past.
The best solution is to order a free copy of each of your three credit reports. You can assess these reports to see if they have errors. You may also wish to get at least one of your FICO credits scores before you apply for a loan. Most credit cards and banks provide updated FICO scores free of charge.
A high debt to income ratio
High debt to income ratios are looked at during your loan application. This is where mortgage brokers should come in. The debt-to-income ratio focuses on the relationship between the monthly income and monthly debt obligations of the applicant. To determine this ratio, loan lenders will divide your monthly debt obligations into your monthly gross income.
One of the frequent issues that happen is that buyers are at the top of their ratio when their new payment is included. The best solution to this problem is to buy fewer homes that will give you a smaller payment each month. You can also pay down other debts you have.
Large undocumented deposits
A loan application from people who have made large deposits into their savings accounts but cannot document from where they got that money can raise a red flag. For example, you might get $10000 from a parent to help you cover a down payment. But you do not have a gift letter from the relative explaining that the money is a gift and not a loan that should be repaid.
The gift letter is very important because if the money is a loan, then lenders will have to include the repayment as part of your monthly debt obligation and if it is a gift then lenders will not include it as part of your debt-to-income ratio. It is therefore important for the borrower to have documentation for all the deposits in their savings account. With the right mortgage broker in Newcastle, you will be advised appropriately before you apply for a loan. This way, you will avoid some of the mistakes that could cost you dearly.
Wisebuy Investment Group’s commercial & regular home mortgage loan brokers will assist you in finding the right fit mortgage from over 60 lenders in Newcastle.
