Posted by John Doe
Applying for a mortgage is stressful, especially if you are unsure about whether you meet the requirements for a mortgage loan. It can be helpful to hire a mortgage professional, or make use of a mortgage calculator in order to see how successful your mortgage application will be. In the meantime, here are some common reasons mortgage loans are denied.
- Bad Credit
Your credit history is the first, and one of the most important, parts of your application that will be checked. You can accumulate poor credit based on past debt, which can be from past loans, such as student loans, credit cards, or household bills. Any past debts will show on your credit history, and if you have a record of bad credit this is a big deterrent to mortgage lenders.
If you have ever filed for bankruptcy, had a Court Judgment issued against you, or had any other official measures taken regarding your debt, this will make it even more difficult for you to be approved for a mortgage. In this case, and even in the case of minor past debt, it is best to hire a mortgage professional to assist you through the process of a mortgage application.
If you are planning to apply for a mortgage, and even if you aren’t, it’s important to keep a regular eye on your credit scores, keeping copies of any important documents from credit agencies, or records of payment. Be prepared to explain specifically why you were in debt, if you ever were. Be sure to keep track of everything and pay your bills on time. If your recent credit history is good, this can make you a more attractive candidate, even if you have past debt.
- First Time Buyer
For first-time buyers, the mortgage process can seem complex. Before you apply, make sure you understand all the application requirements to avoid errors on your application.
If you are a first-time buyer, it is especially important to hire a mortgage professional, or broker, to help you through your application, check your credit score, and make sure you find the best possible mortgage deal.
- Little Credit History
While it is smart to make purchases in cash to avoid debt, this can lead to a credit history that doesn’t show much, which can deter lenders. Mortgage lenders are looking for proof that you can manage, and responsibly pay back debt on time. If you have little or no credit history, it’s impossible for them to know this.
Therefore, you should work to establish a good credit history before you even think about applying for a mortgage. The easiest way to build your credit rating is by getting a personal credit card, using it, and making sure it is paid back on time. This will show you are capable of managing debt, making you a more attractive lendee.
You may also want to speak to your credit lender before you begin the application process. This way you can obtain your credit rating, and be notified of any irregularities on your credit bill or past payments. The more information you have going in the better; and if you’re credit score is good enough, you may be able to receive a mortgage offer before beginning the application process.
- Lack of Information
Mortgage application forms are exhaustive, and it can sometimes be overwhelming to track down all the necessary information, especially in the case of those who have personal information they would rather not include, such as a record of past debt, or employment gaps. Despite this impulse, it is still better to leave all possible information filled in. Gaps in information can be suspicious for mortgage lenders.
By taking the proper precautions, such as checking your credit rating ahead of time, and speaking to a mortgage professional, you can provide all the important information on your file. It is better to be up front about your financial history, even if there are a few smudges, than to leave sections blank.
- Borrowing Expectations
Mortgage lenders will take into account the amount of money you make, and the size of the loan you are requesting. If they feel you do not make enough money to cover your mortgage, you may be denied.
Mortgage lenders, and real estate websites often make mortgage calculators available on their websites. Using a mortgage calculator, you can calculate the amount per month you will be expected to pay. These calculators are easy to find, and widely available online.
Applying for a mortgage, especially for a first-timer, can be a daunting process. As you can see, it is important to be highly organized and provide all necessary information. Hiring an experienced mortgage professional is the best way to ensure your application is as attractive as possible, and you receive the loan you want.