Before you begin the mortgage application process, it’s important to understand all the aspects of the application including why you will, or why you won’t, be able to qualify. In your mortgage application, you will be asked to provide many documents related to your personal finance, employment history, outgoing expenses, income, loans, and credit score. During this process you will also be on the lookout for a good mortgage loan with low mortgage rates.
If, after all this, your mortgage is denied, it can be crushing. Here are some reasons your mortgage was, or could be, denied, to keep in mind for the next time you apply:
1. Credit Score
Poor credit history is one of the most common reasons mortgage loans are denied. You can find out ahead of applying if your credit score meets the minimum to be approved, which is helpful because if you know your score is too low, you can save yourself time and effort going through with the application only to be denied.
Many people have poor credit score and don’t even know it. Make sure you know exactly what your score is, and what it means for your mortgage application, well ahead of the application period. Any past credit card debt, issues with loans, foreclosures, or bankruptcy, will negatively affect your credit score.
Your lender may decide that your income doesn’t meet the requirement to purchase the property for which you are applying for a mortgage. If they believe you can’t afford the property, they will be concerned that you won’t be able to make your monthly repayments on time.
Lenders also look at your employment history. A track record of steady employment is really helpful when applying for a mortgage, while an uneven record may put lenders off. Even if your income seems adequate when you are applying, if there are any dramatic fluctuations over the last few years, this may put the lender on guard. For those who are self-employed, it can be difficult to get approved for a mortgage.
3. Issues With the Application
It can be tempting to exaggerate your income or try to cover up past financial issues, but if there is anything about your application that seems fabricated, you could be denied for a mortgage even if you can afford the property.
Be thorough and transparent on your mortgage application. The truth is far better than getting caught lying or fudging the details.
If you have been denied for a mortgage and would like to better understand why or would like to try the application process again, enlisting the help of a mortgage professional can help you be successful. Mortgage professionals can also help you find low mortgage rates. Contact Northwood Mortgage™ today to set up an appointment with one of our mortgage experts!