It’s never fun dealing with your mortgage application. It takes a lot of time to fill out, and you’re filled with stress wondering, “Am I missing something?”

You know this document needs to be perfect for it to have a chance of approval. With 2 million people applying for mortgages in just one quarter of 2022, the competition is fierce.

But there are ways you can make the process easier on yourself by avoiding some common mistakes people make when applying for a mortgage loan. Read on to learn about these mistakes and how you can avoid them.

Bending the Truth

The application process is serious business. There are a lot of things that can go wrong if you aren’t honest about your financial situation, and getting caught in a lie could jeopardize your chances of getting approved for the loan.

Even if you don’t get rejected because of it, it’s still important to be honest so your lender knows what they’re dealing with from day one.

Not Knowing Your Credit Score

Whether you’re buying a home for the first time or refinancing an old loan, knowing your credit score is critical to getting the best rates. The higher your score, the better chance you have of obtaining a low interest rate on your mortgage.

You can get your free credit report from Equifax, Experian, or TransUnion.

Correct Errors in Your Credit History

It is important to check all three reports as they sometimes contain different information. If there are discrepancies in any of these reports, it will be necessary to dispute them before applying for any type of financing.

Lenders use these factors when deciding how much money they will loan, as well as what rates should be given if approved.

Listing Inaccurate Debts and Assets on the Mortgage Application

Inaccuracies on a mortgage loan application are a big no-no and could result in serious repercussions.

Your lender does a thorough background check on your financial situation before approving a loan. If numbers don’t match up between your application and the information on file, you’ll have to provide more information before your loan is considered.

If the numbers still don’t match up, the lender will think you’re being dishonest and deny your loan request. This means that you’ll need to find another lender or make up the difference in cash.

And if that happens, you could lose the entire home purchase deal.

Don’t Include Debts or Assets That You Don’t Own

You may have deals on the table, or someone made promises to you about a cash reward, but the lender will see these assets as a red flag. They might think you’re trying to inflate your income or resources in order to make yourself look better for the loan - this could cause your application being rejected.

It’s a good idea to include only debts and assets that have closed. Lenders require accurate documents from all parties involved with any outstanding debts.

Misrepresenting Your Employment Status or Work History on the Application

It’s true that having a full-time job for at least 3 months improves your chances of getting a loan. So it’s easy to understand why you might try to claim that you’re a full-time worker, even if you’re unsure what role you play at your current company.

After all, the mortgage application process is lengthy, and you may think that the lender won’t bother checking your employment status as a shortcut - but this is far from the truth. Misrepresenting your employment status could hurt your chances of securing financing.

If you are unemployed and are applying for a mortgage, let the lender know by providing proof that you’ve been actively looking for work. Although it is unlikely, there is a chance the lender will improve your loan.

Not Being Honest About Your Income

If you’re asked for your salary and you don’t know it, never guess. Call your employer and ask for the exact amount or look at past pay stubs to confirm your current income.

Mortgage lenders will ask you to provide a couple of recent paycheck stubs and your most recent W-2 form to verify your income. Some lenders may ask your employer for a letter confirming the amount you’re earning. This is especially common if you have recently switched jobs.

Applying for New Credit

When you apply for a mortgage, the lender will request that you allow an inquiry on your credit report. This is how they check your credit score and verify the information in your application.

However, if you apply for other types of credit while applying for a mortgage, the other debt requests will be visible. This could raise red flags with lenders.

Credit inquiries remain on a person’s credit report for two years from when they were requested. If someone applies for multiple types of credit within this period, some lenders may view such activity as risky behavior by an applicant—potentially making it more difficult or expensive to get approved.

Should You Dispute Hard Credit Checks Before Applying for a Mortgage?

If you find an unauthorized hard credit check on your report, contact the bureau that generated it so they can remove it. However, if it is a legitimate hard inquiry, a dispute can’t wipe it from your credit history.

Applying for a Home Loan After Quitting Your Job or Changing Jobs

If you recently quit your job, there’s no way for the lender to be sure that you have the income to pay off the loan. In fact, if you’ve been out of work for a few months, it’s likely that lenders will turn down your application.

Similarly, if you recently changed jobs (for example, moving from a full-time position to part-time), it may take several months before your annual income can be verified. And without proof of income, lenders won’t be able to know how much money you make or if you’ll have enough left over each month to cover mortgage payments.

Missing Details

Missing details are one of the most common mistakes made on mortgage applications. The only thing that you want to do is to avoid this issue altogether.

If you’re applying for a mortgage and not providing every detail lenders need, it can lead to delays in the application process and an increase in your interest rate. This happens because lenders can’t determine whether they should offer you a loan or the interest you can afford based on incomplete information.

Not Understanding the APR Before Applying

One of the most important things to remember when applying for a mortgage is that you need to understand what APR is. This stands for annual percentage rate, and it’s a number lenders use to determine how much interest you will pay over the course of your loan.

When comparing loans from different lenders, make sure you look at the APR as well as the interest rates so that you know which one best suits your needs.

You don’t want to spend your time on an application for a loan that’s way out of your budget.

Asking for More Debt Than You Can Handle

When you’re buying a home, make sure you don’t borrow more than what your income can afford. You want to be able to make the payments on your loan without going into debt or causing problems with other financial obligations, such as credit cards or loans.

If you got a loan offer that’s more than you can afford, don’t accept it. If you get a pre-approval and the amount is too high, don’t be afraid to go back to your lender and ask for less. Only go with the amount of debt that you’re comfortable with.

Too Many Errors

Spelling errors, grammar mistakes, and incomplete contact information are all reasons why lenders won’t consider you a serious borrower.

If you have a typo, fix it! If you don’t know how to spell something, look it up. Grammar mistakes can be fixed by using a proofreader or by asking someone else to read over your application for errors.

Make sure all the information on your application is correct before submitting it so that you don’t waste time going back to fix things later.

Get Your Mortgage Application Right the First Time

If you are worried about making a mistake when filling out the application, don’t be. There are many resources available to help you avoid common mistakes and get approved for your mortgage loan quickly. Our real estate agents may be the best source of guidance through this process.

Contact us if you’re buying a home in San Diego and need tips on your mortgage application. We can talk about the best home loan for your situation and make the home-buying process smoother.