While this scenario is not uncommon, it is preventable. Here are three of the top reasons a person would have their mortgage application denied–so that you can make sure yours gets approved.
1. Your income isn’t rock-solid.
These days, having a job isn’t enough. Lenders want to see a steady history of documented income, preferably in the same field (bonus points if you’ve been with the same employer for more than two years). If you’re a freelancer or you’ve recently changed jobs, mortgage lenders may view your income as inconsistent, making it more likely that you’ll get your mortgage application denied. Be sure your income is consisted for at least two years to minimize the chances of having your mortgage application denied.
You can prevent your income from coming in between you and your dream home by making sure you have at least two years in your current job, or at least your current field.
2. You have blemishes on your credit.
A poor credit score, or a credit report with late payments, collections, or other undesirable marks is one of the fastest ways to get your mortgage application denied. Lenders want to see a solid, proven history of paying your bills on time.
Work to repair your credit before you apply for a mortgage. Or, you can consider alternative loans. NLC Loans can help those with less than stellar credit buy a home with a credit score of just 580. However, more factors than just credit scores are considered when buying a home or refinancing.
3. You have too much debt.
Most of us have some debt, whether it’s a car or student loans or credit cards. However, too much debt can keep you from getting approved for a mortgage. If the majority of your income goes to your maxed out credit cards are other forms of debt, most mortgage lenders will not add to it with a mortgage.
Paying down your debt can help you avoid getting denied when you apply for a mortgage. Aim for a debt to income ratio of 36%, with no more than 36% of your monthly income going towards debt.
These may be mortgage deal-breakers, but they’re easy to prevent. To learn more about qualifying for a mortgage, or to find out if you’re ready for home ownership, contact one of NLC Loans’ personal mortgage advisors toll-free today at 1-877-480-8050.