When a home buyer needs to settle a loan, mortgage always springs up into mind. City Creek Mortgage defines mortgage as a legal agreement whereby a property or a real estate is secured as collateral. This works when both parties—the landlord and the buyer—are in agreement. Mortgages are the most commonly sought after debt instruments for several reasons, such as low interest rates, straightforward and standard procedures, and a reasonably long repayment period. Applying for one, however, is difficult, as financial constraints come along the way. Here are some reasons one can be denied a mortgage.
Make sure you keep an accurate and up-to-date record of your finances. For lenders, you can tell if you are qualified or not just by checking your income and debt ratio.
When a property has a problem
Sometimes the value of the property is not enough to back the amount of the loan you are applying for. You may have also submitted an appraisal that misses realistic expectations in the eyes of the home seller.
When the upfront money/down payment paid is too small
A bigger down payment is always good, which gives your mortgage application a higher chance of being accepted. This is because the lender views your down payment as a future home investment.
If your credit history is poor
Lenders look at not only your minimum credit, but also if you have a good track record such as avoiding bankruptcy. The loan can be denied only if your credit history is really in bad shape. If you are able understand why your credit score is low, only then you can begin to correct it; the earlier the better. For homeowners, credit information is easily attained through federally mandated websites.
Once you know which of the reasons stated above applies to your situation, contact a mortgage company to help you out in sorting your finances and transactions. So keep your chin up, being denied once offers a valuable lesson in investing properties the right way.