Getting a rejection from a mortgage lender can be annoying, especially if the lender did not come up with sensible and clear reasons for the rejection. There are some lessons to be learned from mortgage rejections, some of which are discussed below. Having this knowledge can put you in a better position when you decide to reapply for a mortgage if you have already been rejected.
The commonest problem and one of the biggest deterrents to people wanting to secure their dream home is income. It is not just about having the income, as most people assume; it is about having a well-documented income profile, usually from a particular employer from a period of about two years. Freelancers and people who have recently changed careers usually fall into this pit. People with spotty employment histories might also get rejected due to their inconsistent income.
Another common reason for mortgage rejection is the credit score or profile of the applicant. You need between 620 and 680 to get your application approved. Many people fail to make this cut, and this explains the reason for their rejection. Late mortgage payments, bankruptcy, and short sales are some of the factors that get you rejected by the lender.
Always make your payments promptly and try to resolve credit issues as soon as possible. You might also want to consider getting a credit card and make sure you pay off the balance monthly to gain a good credit score.
This is another term for having some good points to augment your weaknesses. It balances the bad points with some impressive records. It is advisable to highlight your good aspects that could enhance your chances of getting your application approved.
Having a loan officer who is inexperienced can be a big negative on your side regarding your mortgage application. This might be due to lack knowledge on recent updates in the industry on the part of the mortgage lender. It is best you look around for the best loan officer and ensure they are experienced enough to effectively handle your application.
These are just some of the many lessons to be learned from mortgage rejections. Others include an overall bad application or getting loans at inappropriate times (e.g. during a global financial crisis).
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