Mortgage Loan Application Denied? Here Are Some Reasons That May Have Happened
Most people you know have secured a mortgage loan easily, so, will it be a walk in the park for you, too? That would vary on so many factors. According to a LendingTree report last year, almost one of 10 applicants for a mortgage is denied. In short, it is definitely possible not to get that coveted sum, which will help you realize your dream house. Here are things that may stop you from being approved:
Poor Credit Record
Your credit history is one of the biggest reasons you are denied a mortgage loan. As with other loans, securing one would mean the lender digging up your record and checking your finance behavior.
Hence, they will also check your credit score, a rating from 300 to 850 that measures the likeliness of a person to pay back his debts. This grade is affected by so many factors, including late payments, leaving out balances, and many more.
The higher your score, the higher your chance to be approved. Plus, having a high credit rating means you are entitled to low interests. In one CBS research, it was found that about one in four applicants is denied because of their history. Don’t fret just yet, you can still increase your score through the right steps.
While having a credit history will show if you are a diligent payor of your debts, having no credit record would make it hard for you to get a mortgage loan, too. This is because lenders have nothing to base your behavior on, so they couldn’t gauge the risk of you not repaying.
As such, not borrowing anything in the past is as useless as having a poor credit history. Experts advise building up your record first before you apply for a mortgage loan so you will have a higher chance of being approved.
Yes, plants in the property do matter. This is why it pays to do your research first – as much as it sounds absurd, lenders are notoriously cautious to houses with Japanese plant knotweed. No exaggeration but it could be the reason your loan got denied. It aggressively grows and could destroy the walls of your home.
The shrub, whose scientific term is Fallopia japonica, is known for causing cracks and destroying drainage systems. It is extremely hard to treat and would take years to contain the problem. It could again grow if the main root is disturbed, thereby making it hard for the owner to expand the house. Therefore, it could be difficult for you to resell it as well.
Lenders look at the borrower and the property, which will become collateral. This means that when you fail to pay or defaulted on your dues, they will automtically own the house.
However, the property could be one of the factors that affect your application. Sometimes, the amount you’re asking for doesn’t really equate to the worth of the home. Needless to say, do your research and have an expert assess the value.
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