Getting approved for a mortgage can be challenging for anyone, but there are some things that can make it a truly daunting task. If any of these situations apply to you, be prepared to have a larger down payment, provide more paperwork, and/or pay more in interest and fees.
1. You have bad credit.
This is the most common reason why most mortgage applications are denied. While some banks have mortgages for people with all levels of credit, other banks will simply deny people who do not have a high enough credit score. Even if you can find a loan with bad credit, however, expect to pay more in interest. It is probably a much better idea to spend a few years to build a better credit score and then try to get a mortgage.
2. You own your own business.
While you may know that your business provides you with enough income to cover the payments on the mortgage you want, many banks will delay a mortgage application while they verify every piece of financial information you give them in order to confirm this fact for themselves. Business owners should expect to take at least twice as long to get a mortgage than a salaried employee.
3. You can’t prove a steady income.
If you’re self-employed or work on commission, it can be hard to prove to a bank that you make enough each month to cover the mortgage payments. There is no need to worry because there is still hope for people without a steady income. Many people who have fluctuating income are asked to show a large amount in savings or a significant stash of assets that is easily accessible in the event that they experience a prolonged dip in income.
4. You have a foreclosure in your credit history.
While you probably realize that a foreclosure in your past will make it harder to get a mortgage in the future, you might be surprised by how many banks will hold up an application for this reason. If your foreclosure was within the past three years, it will be next to impossible to get a new mortgage. This is a situation that unfortunately is best resolved with time.
5. You’ve gone through a bankruptcy.
The old rule was that anyone with a bankruptcy needed to wait at least seven years before qualifying for a mortgage. Today, many people report being able to find a loan after three years, but they tend to come with a request for a high down payment.
There are lots of things that can cause a bank to hold up your mortgage application, but these five reasons seem to be the most common causes for delays and denials.
Author Bio: Annette Hazard is a freelance writer that suggests looking for help experts such as those with Intelliloan Today. Annette often writes about small business and finance. She can be found on G+.