Because a home is one of the greatest investments a person can make in their lifetime, it is essential to understand that there are things that a creditor will look for before they will commit to the funds of a mortgage or any other type of significant loan.
As most mortgage brokers can attest to, having qualified buyers for lending has not always been prioritized properly during some of the real estate markets in the past. During the sub-prime mortgage debacle, borrowers bought homes they could afford in the short term, but once the interest rates climbed beyond the prime rate they were no longer able to pay their mortgages. This predatory lending practice caused millions of foreclosures across the country from 2007-2012 and was one of the primary factors in the recession in the U.S. economy.
Because of this, most lenders now have mandates they must follow to approve a mortgage for a buyer. Certainly, some people are more readily prepared than others for first or second time a home purchase and need little effort for approval. But in many cases, especially for first time home buyers, there are things that must be worked on to get them ready for a mortgage application and approval.
For people who have suffered any kind of financial setback within the last seven years or for people who have high debt, there are a few things that will be required to be done to ensure that the mortgage approval goes smoothly. The vast majority of Americans would love to buy a home and not rent. However, not all home buyers are able to purchase a home without some work to improve their qualifications for a lender.
Main Reasons For Mortgage Rejections
Some of the biggest reasons people get rejected for a mortgage include:
• Poor Credit Score
• Poor Credit History
• Insufficient Down Payment
• Lack of Credit
• Insufficient Income
• Lack of Employment History
• Debt Too High
• Home Out of Price Range for Income
When preparing to apply for a mortgage, the most important thing a buyer must do is to show a lender that they are a worthy credit risk for the home they are seeking to buy. That is why many realtors look to have their clients pre-qualified by a mortgage company before they even begin to show them houses.
Pre-Qualifying for a home mortgage, simply means that a lender has examined the basics of a person’s income and expenses and has found they have a good chance of being approved for a loan. However, that does not mean they will be approved. It isn’t until a full examination of a borrower’s: current debt, current credit rating, credit payment history, income, income to debt ratio, employment history and down payment are assessed that a true approval can be achieved. This is only done if all these things are sufficiently positive for an underwriter’s approval.
Even if the applicant(s) fail to obtain a mortgage when they apply, there is good news. Lacking an approval for a mortgage is only a temporary situation. In most cases, people who have struggled with financial concerns and are lacking the proper qualifications to purchase a home, can do some work on their: income, credit, debt, income to debt ratio, mortgage amount, employment history and down payment to get them ready and approved at a future time.
Repairing Credit Scores, Credit History and More
One of the biggest hurdles for some people is poor credit history. This can be readily repaired with some effort. In some cases, the problems are small enough to quickly repair with a few phone calls and corrections. In other cases, it may become necessary to get help from a credit repair company like creditrepair.com to get their credit score and credit history cleared up enough to qualify for a mortgage.
While this process does take some time, the effort is always worth it in the long run. If a person has debt on their credit history that was put on their improperly, this can be readily remedied with the help of a company like creditrepair.com . Companies like credit repair.com can also help repair credit history problems such as old written off debt and bring the credit payment history into a more positive light for a lender to grant a mortgage.
A credit repair company works directly with creditors to help repair their credit score and credit history improve enough to allow them to get financial opportunities. With proper repairs, borrowers are better able to be approved for a: home loan, car loan, business loan or other major credit approval.
