When you are trying to apply for a mortgage, you want to do everything by the book to be approved. However, there are instances where a mortgage lender will deny an application. From bad credit to an insufficient down payment, you don’t want to fall short with certain requirements by the lender. Learn more about why your mortgage application could get declined.
Low Credit Score
The higher your credit score, the better chance of securing the mortgage you want. On the other hand, if you have a lower credit score, you may not be approved. The minimum credit score depends on the lender and type of mortgage, so be aware this can range anywhere from 500 to upper 600’s. Yes, you can be approved with a low credit score, but the lender might ask you to make a bigger down payment.
High Debt-To-Income Ratio
How much of your monthly income goes to monthly debts? The lender will review the percentage of this ratio and determine if you are able to make loan payments too. Experian comments, “It may be harder to secure a loan if your housing payment is 28% or more of your gross monthly income (31% or more if you’re applying for an FHA loan).”
Small Down Payment
Applying for a mortgage loan is a big commitment, as you and the lender already know. That’s why putting more money down for the loan indicates that you are serious. It will also improve your chances of being approved. Tip by NerdWallet: “Putting at least 20% down on a home will increase your chances of getting approved for a mortgage at a decent rate, and will allow you to avoid mortgage insurance.”
Missing Application Information
It’s key to look over the information on your application before submitting it. If you are missing important details, then you can be denied approval. Review your application carefully by yourself or with another person you trust to ensure you have everything ready to go.
There can be a lot involved when applying for a mortgage loan. Luckily for you, American Mortgage Resource, Inc. does the heavy lifting for you. We have simplified the application process so you can fill out information online, at your own pace. If you have any questions about your app, please contact us today!
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