Monday, November 6, 2017

The Top 4 Reasons Why A Loan Doesn't Go Through

1. Credit Scores
This is probably the scariest and most common reason why people's applications won't go through - but this is exactly WHY you should talk to a Loan Officer early in the process, they can set you in the right path in case you don't have a perfect credit score. Also, there are products that only need a mid 600 score which a lot of people don't know. The sooner that you address this problem, the sooner that you can fix it and move on with the process of buying a home. 

2. Debt to Income Ratio
This is something that can be a little hard to understand but basically if you have too much credit card debt or maybe an auto payment that is high compared to the amount of income you earn every month, you may not qualify for the amount that you'd like. Yes, you may still qualify but knowing how much you qualify for is important when shopping for a home. Speak to a L.O. before you start home shopping and figure out what you can afford. 

3. Cash Due at Signing
Depending on the type of loan that you get, you may be required to bring a lump sum of cash to closing. There are programs that allow you to bring 1-3% and then there's other programs that require 20%. The more you put down, the lower the interest and the shorter loan you can get. Either way, it's important to have some money set aside for closings costs and unexpected expenses. 

4. Change in Employment / Financial Responsibilities
If you lose your job while applying for a home loan or if you buy a car or open a credit card while in the process of getting a loan might affect your chances of getting one. This can also be a factor even if you decrease the number of hours that you're working. For example if you were working full time and then end up working part time or maybe you're just not working enough hours. These are all different scenarios that could prevent your application from getting approved in the end. 

This list is a short one, but it covers some of the basic things you want to fix to avoid doing when you apply for a home loan. Even though some of these circumstances are unexpected, some can prevented or you can prepare for them. If you have any questions about any of this, please make sure to give me a call so we can get you straight for when you decide to apply! 

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