4 Factors Things That May Deny you Mortgage Approval
Buying a house through mortgage financing is a great way of acquiring your dream home. For many people, mortgages are lifesavers as paying for good home in these harsh economic times is not so easy. However, you need to bear in mind that a mortgage is not the same as a car loan and many things are involved. With this in mind, this article comes to highlight some of these things just to make sure that you do not fail to be approved for the loan.
- A negative credit report
One of the very first things a mortgage firm will look at once you apply for the loan is your credit report. Most people think they are fully aware of what is on their report but it is very important to check the report yourself before applying for the mortgage. In the case where you have several credit cards, get a report for each card from the different bureaus and ensure that your standings are good.
About 40% of rejections come about due to small mistakes in the credit report and inspecting the reports, helps avoid this.
Another thing that relates to credit cards is unwise spending. Mortgage firms will check the records for the purchases made by use of the credit card to see if there is any that is not rated wise. When you decide to apply for a loan, control your credit card use as much as possible and avoid closing off any accounts you have as doing this will make the lenders investigate you even more.
- Long and outstanding debts
It is not wise to apply for a loan when you know have several thousands of dollars owed elsewhere. Mortgage financiers go to the extent of checking your debt records just to ascertain how safe you are as far as paying back is concerned. Once they locate a debt that is hefty and has been in existence for quite a while, chances are that you will be denied and lose the opportunity to own your dream home. You will need to clear off any debts and you should be good to go.
- Your employment history
Lenders look at this as well. The person who has the best chance of getting an approval is the one who has a long and clean employment history. This is because it shows stability and this makes the lenders determine that you will be able to pay. If you had lost your job or gotten fired in the recent past, you might want to take some time before applying for the loan as this is enough a reason for your request to get rejected.
However, if you changed jobs and you have bank statements to prove that you can manage the payments, you can always apply and produce them as evidence.
- Loan down payment issues
The other thing that you may want to consider as you make the application is the amount of money you have in the bank. This is because you will need to make a down payment in the initial stage. In addition, there will be closing costs to be settled at the end of the whole period and you need to have enough cash for this to be approved. This cash is also known as capital. If you have a poor credit history, you will have to pay higher down payment cost; always put this in mind. From the above, you can tell that getting a mortgage is no easy thing and you need to be well prepared before you collect the forms for the mortgage. It helps a lot if you take some time to inspect your records, as this will help you negotiate with the mortgage firm.
Genelia is an insurance expert and has top-notch information concerning Manhattan Beach mortgage loans. She offers free advice to people who are considering applying for a mortgage through his articles.