There are many reason people are denied when applying for a mortgage loan, so it is good to keep in mind some of the major factors that can jeopardize your chances of closing on your dream home. Here are some great things to keep in mind to not only prevent you from getting approved for your dream home but will also prevent you from a higher interest rate on your mortgage loan.
First and foremost, check your credit score BEFORE filling out an application for a mortgage loan. This is one of the main things lenders will ALWAYS check when approving you for a new home. When checking your score also pull your credit report to ensure you are not reflecting any late payments as it is 35% of your entire score. If you can’t show a history of paying your bills on time, lenders will assume you will also be making your mortgage payments late and may deny you. In addition, you want to check to ensure you are not maxing out your credit. Remember, your credit ratio is 30% of your credit score and swiping a card too often while not paying off the full debt can hurt your credit score as well. When applying for a mortgage loan, it is important to have your debt ratio as low as possible.
Do not rack up your debt, meaning do not take on additional debt before applying for your mortgage loan. This affects your debt-to-income ratio; meaning how much debt you’re paying off every month in comparison to your income. Do not run your credit as every inquiry can drop your credit score 2-5 points. You also do not want to close out credit card accounts. You may be thinking closing a revolving account will help improve your credit score but that is not always the case. By closing a credit card you may be reducing your level of available credit, making your debt ratio severely increase resulting in a lower credit score.
You do not want to change jobs or careers right before applying for a mortgage loan either. This, might hurt your chances of getting approved as mortgage lenders want to see a stable source of income to ensure you can afford your mortgage payments each month. If you are married, keep in mind that it is also not only your credit and financial history under review but both of yours. If one of you has bad credit, you may very well get denied. Do not co-sign anything for anyone as you are becoming partially responsible for that debt. If that person can’t keep up with the payments and it goes into collections it WILL impact your credit negatively as well.
If you do not know where you stand as far as your credit goes, WE CAN HELP! We have been very successful in helping clients better their credit and into their dream homes. We will help you pull your credit report, we will help you build the strongest credit profile we can, and we will help prepare you as much as possible for your new dream home.
We can definitely help each and EVERY situation, please give us a call at 844-FIX-URCR or http://bit.ly/csaelpappt to schedule your FREE consultation!
*Individual results may vary. Please call for more details and to discuss your own individual situation.