Showing posts with label Qualify for a Home Loan. Show all posts
Showing posts with label Qualify for a Home Loan. Show all posts

Thursday, July 1, 2021

5 Reasons You Might Not Qualify for a Home Loan

Now that you have found your dream home, you thought qualifying for a home loan would be the easy part. However, this may not be the case. 

Although lenders are generally more eager now than in past years to approve mortgage loans, there are some instances where you may be denied the loan needed to purchase a home

Should you be preparing to apply for a home loan, here are some of the most common reasons why you may be turned down.

Poor Credit History


If you have had past credit problems, your poor credit history may be the reason your loan application was denied. Since a lender wants to make sure you are not a high-risk applicant, any problems with foreclosures, bankruptcies, or credit cards could be reason enough to deny your claim. Generally, if your FICO score is under 620, your loan will be denied.

Income/Asset Documentation


Even if you think you have enough money to make a monthly mortgage payment, your lender may not think so, especially if you are unable to provide sufficient documentation regarding your income to debt ratio. 



Should questions arise about this or other related areas, private equity representation may be what's needed to let everyone make a well-informed lending decision.

Very Small Down Payment


If you put down a minimal down payment on your new home, the lender will view you as a high-risk applicant, and thus may deny your loan. If possible, try to put down as much as 25% of the home's price as a down payment, since this will almost guarantee approval.

Issues with the Property


If your new home is appraised at an amount that is far less than the amount of the mortgage loan, your lender may deny your application. While you can get a second appraisal, your best option is to shop around for other lenders.

Limited Employment History


Should you possess a limited employment history or have one where you have changed jobs frequently, this can be used against you by your lender to deny the home loan. 

In most cases, a lender will want you to have at least two years of consistent employment with your current employer prior to approving your loan.

If you have had your home loan application denied, don't give up. By seeking out other lenders and making improvements where you can, it is quite possible you may still get the loan needed to purchase your dream home.




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