Top 5 reasons your Mortgage is Denied

Pre-approval is an important step in the home buying process.  I've discussed that in previous blog posts and will continue to remind you of it because it is such an important part of the process.

However, there are times that you are pre-approved and then when the time comes to close, your mortgage is denied!

Let's be pro-active and do what we can to help limit this from possibly happening.

Change of Employment

If you are wanting to move into that new home in a timely fashion, please, please, please, keep your current job until AFTER closing!

Many financial institutions will require 2 years of employment history.  If you change jobs, this alters the two years.  Sometimes if the job is in the same field, it won't be an issue, but you will need to check with the bank you are working with for your loan.

Credit Scores

Oh, the dreaded credit score that you worked so hard on for the last 6 months - 2 years!  Just because you were pre-approved, doesn't mean to all of a sudden to quit paying that credit card on time. This is especially true if your credit is barely in the "good" rating.

The financial institution will run your credit right before closing and if you slow paid or didn't pay and it is reported, this could drop you back into the "poor" ratings and the bank can deny your loan.

Additional Debts

Again, you've worked so hard to get this score high and "good!"  Don't be a knuckle head and go out and buy new furniture for your home or a new car to celebrate your new home.  You might have squeaked by with the debt/income ratio and you just shot it out of the water with that new sofa!

People have shown up to their closing in a NEW car and the loan was DENIED!!  Stay low on the radar, buy new stuff AFTER you close.

Lender Requirements

The lender can and does change the rules in the middle of the game and there isn't a thing you can do about it!

Maybe they changed their minimum credit score requirement or the debt/income ratio.  Remember the two reasons above...well that just sunk your home buying boat!  Don't be dumb (DBD), stay on the ball and take care of your stuff!!

Sometimes you might be grandfathered in, but there isn't a guarantee of this.  Stay SMART.

Appraisal Issues

This one is virtually out of your control.....virtually, but not fully.  If you are selling a FSBO, yes, it all falls on you.  However, if you used a licensed realtor, part of his/her job is to ensure to price your home accordingly.

However, if you are going FHA or VA, there might be specifics that you aren't aware of....again, be informed and work closely with your realtor.

For more information about mortgages being denied, please visit: http://www.rochesterrealestateblog.com/top-5-reasons-a-mortgage-is-denied-after-pre-approval/

Be blessed my peeps!