Applying for a mortgage is a big step toward owning a home, but it’s easy to trip up. I’ve been there—making mistakes that slowed me down or cost me more. In this article, we’ll cover common mistakes on mortgage applications with tips from my own journey and expert advice to help you succeed.
Mistake 1: Not Checking Your Credit Report
Years ago, I applied for a mortgage without checking my credit report. I assumed it was fine, but an old error—a payment marked late that wasn’t mine—dropped my score. That mistake raised my interest rate. Check your credit report six months before your mortgage application. Use free annual reports from the three major bureaus and fix errors early.
Mistake 2: Opening New Credit During the Process
Midway through my mortgage application, I applied for a store credit card to buy appliances. Bad move! Each new credit check can lower your score a little, and lenders don’t like surprises. My loan officer warned me it could have stopped my approval. Don’t open new credit until after your mortgage closes.
Mistake 3: Missing Documents
Lenders need lots of paperwork—pay stubs, tax returns, bank statements. I once forgot a single bank statement page, and it held up my mortgage application for days. Gather all documents ahead of time, double-check them, and send everything they ask for right away. Stay organized to keep things moving.
Mistake 4: Guessing How Much You Can Borrow
I got excited and looked at homes way over my budget during my first mortgage hunt. It wasted time and broke my heart when I couldn’t qualify. Use online calculators to figure out what you can afford. Include taxes, insurance, and upkeep—not just the monthly payment.
Mistake 5: Forgetting Closing Costs
Closing costs shocked me the first time. Appraisal fees, title insurance, and more added up fast, and I hadn’t saved enough beyond my down payment. Ask your lender for a loan estimate early. Plan for these costs—usually 2-5% of the home price—so you’re not caught off guard.
Mistake 6: Sticking with One Lender
I rushed my first mortgage application and picked the first lender I found. Later, I learned another offered a lower rate. Compare at least three lenders. Look at rates, fees, and terms. It’s your money—shop around to save thousands over the life of your mortgage.
Mistake 7: Skipping the Rate Lock
Interest rates change daily. During my application, rates jumped, and my payment went up because I didn’t lock in. Most lenders let you lock a rate for 30-60 days. Talk to your lender about this early to shield yourself from sudden increases.
Mistake 8: Not Understanding Your Mortgage
I didn’t ask enough questions about my mortgage terms. Fixed-rate or adjustable? Prepayment penalties? I was clueless at first. Ask your lender to explain everything clearly. Read all documents carefully so you know what you’re signing up for.
Mistake 9: Buying Big Before Closing
After pre-approval, I almost bought a new couch with credit. Luckily, my lender stopped me—big purchases can mess up your debt-to-income ratio and delay closing. Wait until after you sign the final papers to splurge on anything big.
Mistake 10: Switching Jobs Mid-Process
I thought about taking a better job during my mortgage application. My lender said it could raise red flags—lenders like steady work history, ideally two years in the same job or field. Hold off on career moves until after closing, or check with your lender first.
Mistake 11: Skipping Pre-Approval
I started house hunting without pre-approval once. I fell in love with a place I couldn’t afford—it hurt. Pre-approval shows you what you can borrow and proves to sellers you’re serious. Get it before you shop to save time and heartbreak.
How to Avoid These Mistakes
Here’s a quick checklist:
- Check your credit early and fix errors.
- Keep your finances steady—no new credit or big buys.
- Gather all documents upfront.
- Know your budget and lock your rate.
- Compare lenders and ask questions.
A little prep goes a long way!
Summary
The mortgage application process can feel overwhelming, but dodging these common mistakes on mortgage applications makes it easier. From checking your credit to waiting on big purchases, small steps can save you stress and money. Use my experiences as your guide—get prepared and land your dream home with confidence.
