Five Things You Must Correct To Avoid Mortgage Application Rejection 

If you have identified a lovely property and don’t have enough cash to complete a purchase, a mortgage can be your savior. However, the world might seem crumbling over your head if your mortgage application is denied.

According to the Guardian, one in six mortgage holders has experienced a rejection in the past. Trust us, getting the message that your application has been rejected in underwriting can throw a spanner into the works.

Whether it’s your first time or you want to try again, this article highlights some pitfalls to avoid in getting approval. Let’s jump in. 

Poor Credit History

Are you fully aware of your financial situation? It’s always a good idea to check your credit history. The good news is that several credit reference agencies like Equifax, Experian, and Trans Union provide this vital information. 

A credit report marred with missed payments or defaults can affect the ability to get mortgage approval. Besides a poor credit score, remarks of foreclosure or bankruptcy mean you are an investment risk, and lenders will hesitate to approve your application. You can improve your score by clearing outstanding balances and checking for errors. 

Too Many Credit Applications

Most lenders consider your debt-to-income ratio – which measures your total debt against pretax income – before approving a mortgage application. Every time you make a loan application, the information goes directly to your credit history. According to Experian, Payday loan information stays in the credit report for up to seven years.

So, if you have made many applications quickly, it could be a telltale signifying you are undergoing money problems. Many lenders flag numerous loan requests within a short period as a risk. Utilizing these facilities could signify an inability to handle mortgage financial obligations.

Unverifiable Information 

Sometimes, mortgage application rejection is due to failure to provide accurate information. The lender looks at your income and debt statement. While you might afford the mortgage, if you don’t capture this information well in your documents, the lender won’t. So, keep a neat record of your assets, finances, and income. Incomplete or unverifiable information is one of the top reasons for application denial. 

Unstable or Insufficient Income 

Unstable or inadequate income primarily affects people in the self-employed sector. The lender looks at your income to determine if you can afford the loan and make regular payments.

Ideally, the lender will require a consistent employment history, typically extending over two years. The idea is to ascertain that you are holding on to a job long enough to repay fully. 

If the income is irregular, the lender might be cautious. Ensure you capture the information well in your pay stubs and tax information documents. If you are a contractor, consider going for a specialized mortgage institution to avoid an outright rejection. 

Low appraised value 

Some of the applications don’t have anything to do with you. A lowball appraisal can be the sole reason for the denial of the loan facility. While you reverse a right to request a rebuttal, it doesn’t guarantee a higher appraisal.

If the valuation falls below the requested amount, it will be rejected. The trick is to seek funds from various lenders. 

There you have it. If you are applying for a mortgage, these are the five main reasons it could be rejected. Address the issue beforehand, and wait for good news. If you are experiencing problems with your mortgage application, don’t fret. Call today, and we’ll work something out together. 

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