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4 Possible Reasons Your Mortgage Application Didn’t Work Out

You’ve checked your credit report, you’ve done all of the paperwork correctly, and you submitted everything on time. But for some reason, the lender declined your loan application! What went wrong? It’s hard to say with certainty because there are many reasons why mortgage applications don’t work out.

This blog post discusses four common causes that can lead to a mortgage application being declined.

1) Poor Credit History 

A poor credit history resulting from unpaid loans and delayed credit payments can hamper your chances of getting a loan. Lenders take into account your credit score before approving a mortgage. If your credit score is low due to your poor credit history, chances of getting a loan will decline considerably.

If there are outstanding balances on your credit account or the banks don’t see any repayment history in your previous transactions, it will be challenging to get a mortgage due to low credit scores. It might even lead to failure at first application because lenders look at this aspect before considering other factors like income and employment status etc., which we’ll discuss further below.

2) High Debt-to-Income Ratio

If you have a high debt-to-income ratio, mortgage lenders will consider it an indication that you might not be able to repay the loan. The reason is that your current income will not be able to sustain the monthly expenses plus the loan payments. This increases the chances of defaulting on the loan.

Banks always consider how much money you currently owe against your total earnings before approving any application.

3) An Unstable Employment History 

If you have changed several jobs in the last year or so, it might cause concern to lenders. It shows that you are not dedicated to your job and may leave anytime. This means an increased risk of defaulting on mortgage payments which leads to foreclosure if they approve this application.

This doesn’t mean you need to stay at one company for years, but staying employed with any employer for more than two years gives banks confidence that you will likely handle their loan responsibly as well.

4) Minimum Income Requirement 

Most lenders require that your income be higher than your expenses, including the monthly mortgage payments plus property taxes and insurance. Also, if you borrow more than 80% of the house’s value, they will want to make sure that this extra money is not coming from sources like credit cards or loans since it increases the risk for lenders.

Consulting professionals at Family First Life Strong Tower and Hammer Lane before applying for a mortgage in Denton, TX will help you get a good deal. Our professionals offer mortgage protection and ensure you get a favorable deal. We also provide safe investment opportunities with high return likelihoods backed by solid insurance and protection. Contact us now!