Why People Cannot Qualify For Mortgages

Ever been enticed by via low mortgage rate only to find out you don’t measure up to the credit standards of that particular lender? Unfortunately it happens every day. The good news  only 40% of people cannot qualify, that means there is 60% of the people who can. Nevertheless, following are common way  your loan could be derailed.

Why people can sometimes have a hard time qualifying for mortgages

Credit

  • Credit scores too low- what credit score do you need these days? A credit score of 620 or better, period end of story.
  • Maxed credit cards-where are your balances in relation to the limits? Best to keep consumer debts at no more than 30% of total allowable lines.
  • Credit Inquiries-do they drop your score? Not always, but keep mortgage only credit pulls within a 30 day period to be on the safe side.

Debt

  • Debt paid off in full- does the credit report support this? If not, lenders will use debts reported even id balances are zero, credit report carry’s the weight, but can be supported with third-party validations.
  • Co-signing-did you lend your credit score to someone? 12 months of cancelled checks or bank statements showing they make the payment to the creditor would be required to offset the debt.
  • Debt not offset-how about another housing liability payment or financed consumer item like an auto loan? You’ll need double the income to offset each dollar of debt unless it can be paid off.

Income

  • Not showing income-not showing enough income under your self employed Schedule C? Doing so reduces your borrowing power-best to reduce consumer debts in situations like this.
  • Unreimbursed business expenses/ losses-taking these on your tax return? These could reduce your borrowing power.
  • Occupational change-has your occupational status changed in the last 24 months? If yes, best to be go from self-employed to w2, not the other way around.

Assets

  • Unsourced funds like cash Ddposits-plan on using cash for your transaction? Not so fast, all funds must come from some kind of a bank account and show a clear chain from A-to-Z of where money began and ended
  • Using the down payment-plan on reimbursing yourself later by spending your down payment funds? Don’t do it. Keep your down payment secure throughout the loan process.
  • Transferring Funds-moving money from separate accounts during the loan process? Be ready to show full bank statements of every account the money was in.

A reputable mortgage professional should be able to look at your credit, debt, income and assets and make a determination upfront of whether not you qualify for a mortgage loan. However, you should be willing to send to your mortgage lender financial documentation including two years of tax returns and w2’s, bank statements and pay stubs to support your loan qualification.

In this credit market no loan is a guarantee. What we can say, upfront after looking at your financials, is how likely you are to be able to be successful in getting that mortgage loan closed. See if you qualify online now.Discover why people cannot qualify for mortgages.

 

 

 

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

Why you should wait for your credit to improve before applying for a mortgage

Why you should wait for your credit to improve before applying for a mortgage

In the current consumer landscape, securing approval for a mortgage is a significant challenge. It’s…

How to avoid getting a jumbo loan due to Coronavirus

New Mortgage Loan Limits for 2023

The Federal Housing Finance Agency announced on Tuesday, November 29th the new loan limits for…

buy a home now vs waiting

Buy a house now or should I wait?

One of the things homebuyers are always asking themselves is buying now versus waiting. Mathematically…

Mortgage Word Cloud Art

Why your income is your lifeline to finance a home

Getting mortgage loan financing requires you providing a blend of good cash, ample credit, and…

View More from The Mortgage Files:

9 Comments

  1. […] paid off in full- does the credit report support this? If not, lenders will use debts reported even id balances are zero, credit report […]



  2. […] It’s not getting any easier these days to get a mortgage, these rules clearly draw a line in sand between qualifying and not qualifying. […]



  3. […] it depends on all four factors of creating a mortgage, credit, debt, income and assets. Assuming you have the necessary assets for down payment and/or […]



  4. […] *Don’t meet one or more of these requirements? Not to worry, financing is still attainable, however more attention will be given to determine ability to qualify. […]



  5. […] *Don’t meet one or more of these requirements? Don’t worry. However, more proof will be required to determine your ability to qualify. […]



  6. […] *Don’t meet one or more of these requirements? Don’t worry. However, more proof will be required to determine your ability to qualify. […]



  7. […] *Don’t meet one or more of these requirements? Don’t worry. However, more proof will be required to determine your ability to qualify. […]



  8. […] *Don’t meet one or more of these requirements? Don’t worry. However, more proof will be required to determine your ability to qualify. […]



  9. […] you better terms on other credit obligations, such as loans, consumer credit products and certainly mortgages. Keep in mind that applying for new credit will result in a small, temporary drop in your credit […]



begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!