Top 3 reasons mortgages are DENIED!
How to Avoid Mortgage Denials: Top 3 Reasons and How to Fix Them
Getting denied for a mortgage is a major bummer, but the good news is most denials are preventable. Today I’m sharing the top 3 reasons mortgage applications get denied and, more importantly, how to avoid them.
1. Credit
How to avoid this:
- Check your credit report for errors and dispute them if needed.
- Pay down debt and make on-time payments for several months.
- Don’t open new credit accounts or take on additional debt before applying for a mortgage.
Managing your credit proactively can make all the difference.
2. Not Enough Income or Employment History
Lenders need to see steady and stable income to know you can handle the mortgage payments. If your income doesn’t support the loan amount you’re applying for or you have gaps in your employment history, it’s a red flag.
How to avoid this:
- Have been in the same job or industry for at least 2 years before applying.
- If self-employed, gather and organize your tax returns to show your income.
- Be prepared to explain any employment gaps and provide documentation if needed.
Consistency and clarity in your income history will go a long way.
3. Incomplete or Incorrect Information
Mortgage applications require a lot of paperwork, like tax returns, bank statements and proof of down payment funds. Missing or incorrect documents can delay your application or get you denied.
How to avoid this:
- Verify all your paperwork is complete and accurate before submitting.
- Use a checklist to make sure you have all the documents.
- Work with a mortgage pro to guide you through the process and not miss anything.
Having your ducks in a row will save you time, stress and potential setbacks.
