Nowadays, mortgages are an excellent way to buy your own home finally. There are different home loan options to choose from offered by different types of mortgage lenders. There are FHA loans, VA loans, USDA, loans, etc. Depending on your qualifications, you can find a mortgage that will best suit your situation.
However, not all that applies for a mortgage get approved for a home purchase financing. More often than not, borrowers fail to provide the minimum requirements. But could be the possible reasons why a home loan application gets rejected?
Here are seven common reasons why you got rejected for a mortgage.
Bad credit score
One reason your Mortgage Lender San Antonio rejected your application is because of a poor credit score. Whenever you apply for any mortgage loan, lenders use your credit score and report to check how you handle your credits. When you have a bad credit score, it usually means you fail to pay for credits responsibly. Lenders take this as a bad sign and will often reject your application.
Unstable employment history
One mortgage requirement is stable employment history. If you fail to verify your employment or can’t stay in a single company for at least two years, then lenders will doubt your ability to pay off the mortgage and will most likely reject your application.
Another common reason why borrowers fail to get approved for a mortgage is because of self-employment. It can be hard to prove your employment, plus the fluctuating income is another factor. If you’re unable to show your ability to make your monthly mortgage payments, you can get declined for a home loan.
Inaccurate Asset Documentation
Individuals who fail to provide a record of their assets and finances often get rejected for a mortgage. This happens when you don’t list your income and assets the right way. Make sure to document all of your assets and finances accurately. You should be able to show your lender your previous tax returns to improve your chances of a home loan approval.
The reason why your mortgage application was decline isn’t always because a borrower fails to meet the minimum requirements. There are times when your property of choice fails to meet the requirements of your mortgage loan. It’s always good to shop for different Mortgage Lender San Antonio and see which one can help you finance your dream home purchase.
Small Down Payment
Your deposit will depend on the type of mortgage you’re applying for. Each mortgage type has a minimum home loan requirement. For example, you’re applying for an FHA loan which requires a minimum of 3.5% down payment fees. Let’s say you can afford the required minimum down payment, but this can lead to higher interest rates. If you fail to compensate, it can also lead to a mortgage rejection.
Good Read: How to Save for a Down Payment on a House
There are times when we can’t help but make mistakes. This is the very reason why one needs to be very careful when filling all the forms and the questions your Mortgage Lender San Antonio will ask related to your home loan application.