3 ways that will prevent you from getting a mortgage

February 12, 2020/Scott Sheldon

If you want a mortgage, you need to play by the lender’s rules. There’s an old saying called the Golden Rule he who has the money makes the rules. When it comes to getting mortgage loan financing you need to be prepared to show supporting income documentation and have your ducks lined up. Here is what you should know…

You don’t have a two-year work history

Maybe you just came to the United States and you’ve only been here for less than a year. You need to be able to show that you’ve been filing US  tax returns and working in the United States for 24 months. All mortgage loans require a two-year work history.  This is something to keep in the back of your mind when Documenting work history with a mortgage company.

You’re not filing tax returns

Be responsible. If you’re legally required to file tax returns. Do so, especially if you’re self-employed. If you’re self-employed, you need to file tax returns.  End of story. If you’re not you’re going to have a tough time getting a loan and the only loan that is available is a bank statement product  which oftentimes requires 20% down with minimum credit score of 720. So be sure to do your research. If that situation pertains to you. The best rule of thumb is to file your tax returns pay the taxes and show the income.

The credit is really bad

Bad credit is not necessarily an automatic deal-killer, but it is if you don’t have at least a 3.5% down payment, and a stable job history not always, but in many occurrences when there is a bad credit type situation, it’s not just bad credit, there are other things involved beyond the bad credit which can make things very shaky in the eyes of the lender. In other words, if your credit is not good to say under 620, not good, make sure your income is strong and your debts low in relation to a proposed mortgage payment.

If you’re looking for a mortgage or need some guidance, you should speak with a lender that understands unique scenarios and it’s willing to be creative so long as the creativity is in alignment with today’s mortgage lending guidelines.

Looking for a mortgage? Get a no-cost quote now.

 

Share:

Share on Pinterest Share on LinkedIn

Posted in: , , , , , , , ,

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

"How Seller Credits Can Help You Maximize Savings on FHA and Conventional Loans" explaining what seller credits are, how they can be used for closing costs or interest rate buy-downs, the FHA 6% seller credit allowance, and a comparison table of conventional loan seller credit limits based on down payment. Includes a pie chart showing a split of 3% used for closing costs and 3% for interest rate buy-down.

How seller credit maximize your purchasing power on a conventional or FHA home loan

Maximizing Your Home Buying Power with Seller Credits When purchasing a home, every dollar counts.…

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

The Risks of Chasing a Lower Mortgage Rate

Why Chasing a Lower Mortgage Rate Can Backfire When buying a home, it’s natural to…

A woman sitting at a kitchen table looking through documents with an American flag and framed military photo beside her, symbolizing a surviving spouse exploring VA loan options.

VA Loan Options for Surviving Spouses

Understanding VA Loan Refinance Options for Surviving Spouses Losing a spouse is one of life’s…

View More from The Mortgage Files:

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!

GET YOUR FREE RATE QUOTE NOW