Now you’re excited to buy your dream home. But before we go through the process, we have to make sure that you won’t get denied to your mortgage. Here are the top 3 reasons people gets denied to their loan application.
Your income isn’t enough
Definitely, the lender will check if you have the capacity to pay the loan. Having a job is not enough in order for you to qualify for a mortgage. Lender will check if you are stable to your job and if your income is enough to shoulder the mortgage. If you are a freelancer, you often change jobs, and the lender will view your income as unstable. How are you going to pay them back if you don’t have a stable source of income. In order to avoid getting denied you have to ensure that, you are stable to your job and make sure that, your income is not just enough but more than enough to cover your mortgage.
Poor Credit History
Another common reason people get denied with their loan is poor credit history. Lenders will do a background check on your previous loan to determine if you are a good payer or not. So, if you were not able to pay your previous loan it will absolutely make a big impact on your credit score. Let’s just put it this way. For example, you are a lender and I am a borrower. After doing a background check on my credit history, you’ve found out that I was not able to pay my previous debts. Would you still lend me some money, if you know that I don’t have plans of returning it back to you? Would you still want to take additional measures to justify taking the risk? Most probably your answer would be a big NO! So in order to avoid this make sure that, when you are getting a loan you have to ensure to take responsibility for it.
The value of the property will determined by an appraiser, to check how much is the current market value of the equity. If you have a bigger equity on your property the bank is willing to you lend you a bigger amount of loan. However you are responsible to pay for the loan if you do not want to lose your equity. If you have too little equity on your property, you will be asked by the lender to reduce the amount of your loan, which would require you to come up with more money or deny your loan entirely.
Take note of these top 3 reasons on how to avoid getting denied to your mortgage, so that when you apply for a loan you can prepare and get an approval. However, for those of you who did not meet the qualifications for a mortgage loan, don’t get discourage, Instead, let this be you motivation to improve what you need to improve with your credit and finances.