Most people apply for a mortgage in order to buy a house. It is quite challenging to get a mortgage nowadays. The financial institutions look into various factors before they approve a mortgage application. There is always a risk that your mortgage application may be rejected. Here are some of the reasons your mortgage application may be denied.
Poor credit score
This is the first criteria for getting a good mortgage. You need to have a good credit score. So, you must pay your bills regularly and don’t have any debt. Any bankruptcy or foreclosure cases may also lower your credit score.
If you cannot demonstrate sufficient source of income, your application will be rejected. The banks would like to see that you are solvent enough to pay off your mortgage every month.
Change of employment
The banks want to see that you have been employed consistently for two years in one job. If you switch jobs often then it will affect your mortgage application negatively.
Debt to income ratio
Your debt to income ratio is an indication whether you are in good financial standing. You should have fewer debts. Your ratio must be low. If your ratio is more than 43%, then your mortgage application will be rejected.
Low down payment
Usually, it is required to pay 5% to 25% down payment when buying a home. If your downpayment amount is too low then your application may be rejected.
Before applying for a mortgage, you must make sure that your credit score is good, you are in good financial standing and you are in a stable job. Otherwise, your mortgage application may be denied.