Has your application for a home loan or mortgage been turned down, declined or denied?
There are many reasons why a home loan or mortgage application would be turned down, declined or denied.
1. Low Credit Scores: The minimum credit score requirements for home loans have risen over the last few years. Where it was common to see loans approved with scores below 600 now most lenders require a minimum score of at least 640 to approve a home loan.
However, a seasoned and savvy loan officer will often be able to formulate a plan to help you overcome this obstacle. Just last month I helped 2 families with the purchase of their home that had scores below 640, it took a little more work and time, about 3 weeks longer, but today they are in their new home and happy.
2. Past Credit Issues: Items such as short sale, foreclosure and bankruptcy are all obstacles that can cause your loan to be turned down, declined or denied. While there is very little that can be done in the case of the foreclosure, we are seeing buyers buy their new home shortly after short sales and bankruptcy. Recently I helped a man that had just gotten out of Chapter 13 bankrutpcy the month before he closed on the purchase of his new home.
3. Debt to income ratio: Conventional guidelines limit the debt to income ratio to 45% while FHA and other government programs have similar guideline in the low 40's. However, in the case of the FHA and VA loans there is a way to get a DTI approval as high as 55%. I have had clients that I have helped that had been turned down by other lenders because their DTI was in the high 40's and were shocked when we were able to help them close on their new home with no problems.
These are just a few issues that can arise and cause your loan to get cancelled, declined or turned down when you are trying to purchase your new home. However, many of the issues that would stop a inexperienced loan professional will be a mere detour to a seasoned mortgage professional. Make sure you are working with someone that is aware of program guidelines as well as exceptions and has experienced with using those exceptions to their clients benefit.
If your loan has been turned down, declined or denied, give me a call for a second opinion or to come up with a plan to overcome your hurdles.