Top 10 Reasons Loan
Applications Are Rejected
As interest rates rise and rising housing costs swells lenders' portfolios with riskier loans, lenders will tighten underwriting rules making it tougher to buy a home.
Still - in hot markets and in cool ones - the fundamentals apply.
Getting a loan application approved is often knowing how to keep lenders from saying "no." To that end, here are the Top 10 reasons loan applications wind up the circular file. There are more, but these top the list.
1. Being in denial about what you can really afford. Apply for too much and you could be out the door faster than you went in. Let the lender decide what you can afford to borrow. From that, you decide what your budget will realistically let you afford to pay each month Get pre-approved with a bona fide, carved-in-stone pre-approval that guarantees in writing a loan amount, interest rate and as much of the other loan terms as possible.
"It makes your offer more attractive to sellers," said John Gregory of Benchmark Mortgage.
2. Poor preparation. Get all your docs in a row. The more information you have available at application -- proof of income, investments, assets, debts, tax returns for the self-employed, even addresses, current and past -- the more complete the loan officer's analysis can be in a more timely manner.
3. Misunderstandings. You may need loan programs explained. Industry jargon about an "index," "margin," "T-bills" and other terminology is familiar to real estate and mortgage professionals, but likely not you. Your loan representative can help you with any terms you may not be familiar with, you can visit many online glossaries or pick up one of many real estate mortgage books, virtually all of which contain a glossary.
4. Not realizing you are self-employed. First-time buyers who are self-employed (which can include working at home, being paid by commission only, or owning 25 percent or more of a business) often need to show tax returns as a proof of income. Communicate your employment status before the loan hits the underwriting process and avoid snags later.
5. Overlooking property
repair problems. Government loans on homes in need of repair
need to come with instructions explaining who is responsible for
repairs and when. Ask the loan representative for assistance.
Top 10 Reasons Loan Applications Are Rejected
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