Archive for the 'Mortgage' category
Top 5 reasons mortgage applications are rejected
30 percent of purchase mortgage applications are either rejected or abandoned, according to the Mortgage Bankers Association.
It's good to know the kinds of things that could cause an application to be rejected especially in light of the fact that mortgage lenders are more restrictive in terms of their lending guidelines.
Here are the top five reasons mortgage lenders reject applications.
1. Income: If the income is too low for the mortgage amount a buyer is seeking; often, a spouse's credit issues can create this problem, if the spouse plans to actually co-borrow on the mortgage and cannot be considered by a lender.
2. Credit issues. The FICO score plays a very big role in the type of loan you can get. More than one-third of Americans, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.
3. Property appraisal. Appraisal guidelines have tightened up so it is more common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.
4. Poor condition: More transactions are falling apart due to condition problems with the property. Many lenders will not approve the loan if the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.
And with condos, if there is no home owner association or if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, the application is likely to be rejected.
5. Documentation with application. Today, lenders like to verify everything. Applications with incomplete or unverifiable information are doomed.
As you can tell, it is very important to have a good mortgage professional by your side to guide you and help you answer any question. It might be as simple as buying a stove you find at Craigslist and installing it before the closing, paying some bills down, getting a co-signer or waiting 6 months to improve your FICO score.
