How to avoid mortgage problems

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Nowadays banks in Dubai and Abu Dhabi are getting more and more cautious about home mortgage loans. Even consumers with good credit and plenty of cash may face mortgage problems and not qualify for a home loan successfully if some last-minute  issues pop up.

Follow these four tips to make sure you’re on the right end of a mortgage closing:

VacationRentals.com Don’t make any major purchases before closing your mortgage loan. Many homebuyers make the mistake to think that just because they have a mortgage deal all lined up, the deal is done. However, banks can sometime  pull mortgages when the homebuyer buys a new car or makes another big purchase. They believe that such purchases suggest more debt for the homebuyer and more risk for the banks. Don’t buy any major items until after you have signed the deal! That also applies to cash deals, since banks also check out your cash reserves when they approve a loan.

You should also avoid big career changes. Your salary and job stability are also taken into account by lenders when they evaluate home loans. Any career change you make could have a negative effect on your home mortgage loan. In the worst case scenario, the bank could pull the loan. In the best case scenario, it could delay the process until you prove that your new job is stable enough and that you will have the financial resources to pay off your mortgage debt. That applies especially if you change industries.

Be ready for a last-minute credit check. This is related to point No. 1, but this is not exactly the same. Banks and lenders can always make a second credit check right before closing. That means that if you miss any credit-card payments or are late on a mortgage payment between the time you were approved for a mortgage and the actual closing date, you may threaten the purchase of your new home. Even applying for a new credit card can cause a credit-score inquiry, which could influence negatively your credit score and put your home loan at risk.

Be cautious about closing-cost surprises. Some homeowners invest all of their money into the mortgage down payment and don’t leave enough to pay for closing costs. Don’t make that mistake. Closing costs can amount to a few percent of the cost of a new home. Unfortunately, closing costs are dynamic and can vary all the time. Don’t forget that if you don’t have cash set aside to pay more for mortgage rate points or on closing fees than you were expecting, you can face mortgage problems and lose the home.

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