Getting a home mortgage is not as easy as it once was. There are a lot more challenging situations and lenders are becoming very selective about how they loan money to the especially large amount that is needed to purchase a home. If you have been declined for a mortgage you are not alone. These are some reasons why you may have been denied for a mortgaged.
If you paid your bills late it can affect your acceptance rate for mortgages and other loans. The lender needs to know you will repay your loan and keep up with your monthly payments. If you pay your bills late this can hurt your credit score and your acceptance rate. Your payment history makes up 35 percent of your credit score. Late payments will be held against you.
Accounts in Collection
If you are not able to repay the loans and bills you already have a lender is not going to give you more money especially a large sum for a home. You need to keep the accounts you have current and in good standing to get approved for additional loans.
You Change Jobs Often
If you leave your current job for a better opportunity that is one thing. If you are changing jobs every couple of months this can be a warning sign to the lender. They may think you are unstable and not responsible enough to keep a job. Lenders want to see a strong employment history so they know you have an income to pay your bill. If you change jobs often you are considered to be high risk. They will look back as far as two years and see the different jobs that you have worked. You should not have more than three employers in the past three years and should have no gaps between jobs. Do not change your job after you have applied for the mortgage as this can lead to delays.
Trouble With Your Bank Account
Lenders will want to see your bank statements to check your finances and look for any inconsistencies in the information that you reported to them. They will check the statements for some things they consider to be suspicious. This includes changing addresses frequently or using PO boxes. Wire transfers to other countries are something of concern. They look like there may have been possible activities related to terrorism. If you deposited large amounts of cash this can also look suspicious. If you use several money orders in a row this can be a cause for concern to your lender. The lender will also look for overdrafts on your account and the frequency at which they occurred. This can show that you do not have a good handle on your finances. Your bank account will further verify your income.
You Got a New Credit Card
You may not realize that opening a new credit card or getting a new card can hurt your chances of getting a mortgage. To get a mortgage your debt to income ratio needs to be less than 43 percent. If you get new credit you may increase your debt and will not get approved for the mortgage.
You do Not Have Cash for Closing
The clothing costs can be steep. In addition to the down payment, there are several fees you are going to need to pay. You may have to borrow money to help with the closing costs. If you do not have solid proof to show that you have the money ready for closing you may not get approved for the mortgage. You will need to show that you have this money available. If a loved one is helping you with these costs they will need to provide proof that they have the money and are willing to help. If you apply for a loan for the closing costs this will hurt your chances of being approved for the mortgage. The closing costs are different from the down payment. You will also need to prove where you are getting the funds for the down payment. You may need to show bank statements and other financial documents to show you have access to this money and it is available for use.
These are some of the possible reasons you have been declined for a mortgage. Lenders are very selective about how they are willing to give a loan to so you have to show them that you are stable and responsible to get approved for a mortgage.