The Borrower Gets Rejected For A Mortgage

Top 5 Reasons For Which

Home Loan

If you’re looking to purchase a new home or refinance the existing home.

The first step is to find a lender who approves or offers a home loan.

Lending Criteria

Usually, the lender will offer a home loan based on your credit profile, debt to income ratio, financial backup, job history and salary.

Below are the top 5 reasons why buyers or borrowers get turned down for a mortgage.

1.Credit Profile

Credit Profile (FICO Score)

Cash may act as a king in real estate, but a good credit score or history plays a vital role in the purchase of a new home or refinance your existing home.

A FICO score of 720 shows the positive financial history and a score below 680 could not be an unfavorable one, but may lead to higher interest rates.

2. Financial Backup

Financial Backup

If the borrower or buyer doesn’t have enough funds to make larger down payment (3.5% for FHA and 10%-20% for most other banks), then most banks and private money lenders would not offer the loan as it becomes quite risky.

3. Income

Income

If the borrower doesn’t have proof of his/her last two years income, despite of the good credit score or better line of equity for their home, obtaining a home loan would become tougher.

This can be a huge barrier in the mortgage process, especially for retired.

4. Unemployment

Unemployment

Today, most lenders are looking for at least 2 years of job security to offer a home loan.

However, it is not a definite guideline to obtain a loan. If you change jobs instantly, but with the same line of work, it won’t create a problem, particularly if the job change is only for higher income.

5. Debt To Income Ratio

Debt To Income Ratio

When the borrower has a high debt to income ratio exceeding the bank’s guidelines it becomes tough to obtain a home loan, because your debt to income ratio is the direct evidence to make repayment for the money you want to borrow.

Conclusion

When looking for the purchase or investing in the real estate, feel free to contact us at http://www.cbmmortgages.com. We are here to satisfy all your mortgage needs and demands best.