Buying a home is no easy task. One of the significant tasks that come with purchasing one is choosing the right mortgage – one that works best for you financially. You have done your research, consulted your real estate agent, asked around and now found what you think is the best mortgage there is. Now you’re ready to apply and close the deal, but before doing so, read on for some of the reasons your mortgage application can be denied and tips to prevent them from happening.
Your Income is Not Secure
Lenders will check how stable your income is – that is your employment or business. Well, you just found a good paying job, so no worries, right? Short employment history in a company presents no problem, but if you are in a probationary period, lenders might not be happy about it before it ends.
Mortgage lenders often do the last minute check on your employment. The lender will call and ask if you are still currently employed and if you can continue to do so. So before you make that job change, consider staying a little bit longer until you close the deal on your chosen mortgage.
Bad Credit History
Lenders do check your credit history. The higher your credit score is, the better. Before applying, review your credit report by getting a copy from your credit reference agency. Look for anything that is out of place. There might be some clerical errors that need to be corrected. If your ranking is not looking that great, give your score a boost. Close down credit card accounts that you don’t use. If you don’t make payments on time, do the necessary steps to do so. It might take time but will be worth it for your credibility with mortgage lenders.
You Don’t have Enough Deposit
Rule of the thumb: the higher the deposit, the better. A higher deposit will increase your eligibility in the eyes of the mortgage lenders. A higher deposit can also open up better deals for you. So make sure to set aside enough cash just for your deposit.
You have A Lot of Debt
Perhaps you are buried in debt that you are struggling to pay off. Debt does not work well with creditors. Lenders often look at your debt-to-income ratio before deciding to accept your application. If your total debt is more than your income, you might be living beyond your means. This does not sit well with creditors, so take time to correct this by paying your debt little at a time. This may take time but doing so will increase the chances of your application being approved.
If you have done everything and were still denied, review your application. Go over your credit history again. Research other mortgage lenders. If you are a first time home buyer, consider FHA loans. If you are a veteran or your partner is, consider lenders that offer VA Loans Corpus Christi. You have more options than you think there is so don’t lose hope.