8 Reasons Why Lenders Reject Mortgage Applications
The mortgage process is a two-way street. For it to move forward, your prospective lender would have to approve your application. If you don’t get a positive response, it might be the end of the road. Although you can seek loaning opportunities from different financiers until you succeed, being rejected the first time could foreshadow the conclusion of your subsequent tries.
Why would a lender deny your mortgage application? Here are the eight possible reasons why you might get a no:
Low Credit Score
Most Lancaster New City reviews would say that bad credit history is the most common culprits behind mortgage request rejections. While lenders have different risk appetites, almost all of them consider creditworthiness as the deciding factor when making credit decisions.
Unreasonable Loanable Amount Request
If your credentials aren’t good enough for the amount of money you’d like to loan, don’t be surprised to be given a thumbs-down. Lenders observe loan size maximums to avoid having too much skin in the game.
If you’re going to enter retirement before your loan matures, any lender will turn you down. Shortening the term is the usual workaround to this hurdle, but doing so would increase your monthly amortization.
Lack of Financial Stability
Any lender would size you up based on your financial standing. Having a spotty employment record and inadequate cash reserves wouldn’t help increase your chances.
High Debt-to-Income Ratio
When at least 40% of your monthly take-home pay goes to your regular debt payments, including your projected mortgage expenses, securing a housing loan is only a pipe dream.
If you can’t walk the talk, meaning back up what you claim, then is going to be a no. No lender would just take your word when hundreds of thousands, or even millions, of pesos are on the line.
Risky Property Type
As security, some properties tend to be riskier than others. Any honest real estate professional would admit that condos are more vulnerable to market crashes than detached houses are. Your projected lender might reject your mortgage application based on the property type alone—or at least put stricter eligibility requirements in place.
When a lender tries to reach you and you don’t respond accordingly, it could bungle your housing loan request. It’s imperative to keep your communication lines open, and not make the other party wait for too long. Otherwise, you might blow your chances of getting approved, and possibly lose the reservation fee you may have paid.
Understand the unique requirements your prospective mortgage lender has, and work hard to put yourself in a good position to meet them. Getting approved isn’t easy (as it should be), so cover all the bases to realize your dream of being a homeowner.