Before you get a loan, lenders take into consideration a number of factors. They have criteria to determine who qualifies for a loan and who does not. It also determines the maximum amount of funds you can receive. Getting a mortgage loan can be helpful when you are looking to buy a home, but getting the mortgage itself may not be easy. A rejection can make you give up hope on finding the perfect home. Let us look at some of the reasons brokers reject mortgage applications and how we can work on yielding better results
You application may have been rejected because you have a bad credit card report. Your credit card is important in the application process, lenders use it to check your loan history and determine if you qualify for a loan. If you have a bad report, you are less likely to get a mortgage. A bad credit report means you do not pay your loans on time. Lenders are unwilling to give you a loan if they don’t trust you to follow up with the payments.
If you don’t have a permanent job or you changed jobs recently, it may explain why you got the rejection. Lenders look at the income pattern before confirming your loan application. They cannot tell if your income is consistent with a one or two year paycheck. Most lenders give loans to borrowers with a 3-year minimum consistent salary. You also have to prove the legitimacy of your check by providing your work contacts.
How much is your disposable income? Disposable income is the amount of income left when you take care of all your monthly commitments. Before they give you a loan, lenders check whether the disposable income will handle your new mortgage payments and still leave you with enough to live through an entire month. If your salary cannot handle all these commitments you are more likely to face a rejection or get a lower amount than you expected.
Your mortgage may have been rejected because you did not have enough money for a down payment. Most lenders give loans to buyers with at least 5% of the value of their potential home. It is unrealistic to expect lenders to provide you with 100% of the money to buy a new home. Don’t rush into buying a new home without saving enough money that will cater for a down payment. The more cash you have saved, the higher the mortgage you will receive.
Don’t apply for a mortgage with too many banks. If you want to know how much you qualify for, get a pre-approval letter from a real estate agency then you can look up banks that are more likely to approve your mortgage application. The more you apply a mortgage and fail, the less likely you are to qualify for a loan. Failed applications appear on you bank and credit statements and they may bias other lenders into rejecting your application.
Before you apply for a loan, ensure you follow these standards to increase your chances of being successfull.