Few things are more heartbreaking than finding the perfect home for you, but then getting turned down for a mortgage. By knowing some of the common reasons lenders reject otherwise qualified applicants, you can be proactive in avoiding them. Here are a few rejection reasons:
Information on your application is inaccurate or incomplete. Lenders will want to know about all aspects of your financial status, so make sure your know exactly what information and documentation you’ll need to provide, and don’t omit- or lie about- anything. Also, be sure lenders can quickly get hold of you should they need any further details.
Problems with your credit report. You may have a fine credit score, but if there are mistakes or omissions on your credit report, it may look that way to lenders. Get a copy of your credit report and ensure it is error and omission free before you apply for your mortgage loan.
There may be issues with the property you intend to purchase. Not every property is an acceptable risk for lenders in that they may not be able to recoup their money should they need to sell it. Check with lenders early on to make sure they deem as an acceptable risk any property you’re considering.
Your financial situation may have changed significantly prior to applying for your mortgage. Avoid making major purchases, like a car, changing jobs, or moving your money around right before you apply for your loan, lest you throw your debt-to-income ratio off, create uncertainty about your future earnings, or make it difficult for lenders to track your assets.