Nearly one-fourth of those who apply for a home loan are denied, according to the Federal Reserve. As a result of the Housing Crisis, it has become extremely difficult for borrowers to obtain mortgages. Below are ten factors that can put your mortgage hunt in jeopardy:
1. You are self-employed. If you are self-employed, two major issues arise when you are trying to obtain a mortgage. The first is that the income you earn from your business can be very unsteady. These fluctuations make you appear to be a risk to lenders. The second issue is that documenting small business income is more difficult and most lenders require two years of proof of income to qualify for a mortgage.
2. You have a subpar credit score. The average U.S. credit score is now 750. This is up from the 720-average a few years ago. You can get a mortgage with a score under 620, however the rates and fees will be very high.
3. You do not have enough money for a down payment. Lenders are now requiring that borrowers put a substantial amount more down, than before the housing crisis. If you do not have enough to put down, you may look too risky to lenders. Some down payments are as high as 15% to 20%; however, if you qualify for an FHA loan you may only need to put between 3.5% and 5% down.
4. You are new to the housing market. Many lenders now require borrowers to have at least a two-year housing history. However, this can include verifiable rent payments. If you are a recent college graduate, a rental history may not be an issue to your lender.
5. You are a new employee. Many lenders require borrowers to provide a two-year employment history in the same field of work before they will issue a loan. This is the result of the high unemployment rates over the past few years.
6. Your annual income is too low. If your monthly debt payments make up 45% of your gross monthly income, most lenders will see you as a risk. Any extra debt will decrease the likelihood that you will qualify for a loan.
7. You have applied too often. Contacting too many lenders can dictate the outcome of your qualification for a mortgage loan. Numerous loan applications can pull down a credit score. However, if you have applied within a week or two of each other, these inquiries should not affect your score.
8. You have too much debt. Lenders add up all of your debt including: auto payments, credit cards, student loans, etc. If your debt is substantial, many lenders will deny your mortgage application. Even if your student loans are in deferment, those balances are not always removed from your debt-to-income ratio.
9. You just made another major purchase. Beware of large purchases if you are planning to purchase a home within the next few months. If you have recently purchased a car, this can impact the likelihood that you will be approved for the mortgage.
10. You picked the wrong bank. The bank you choose as your lender can affect whether or not you get the mortgage. Larger banks will likely scrutinize you more than smaller, local banks.
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Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Foreclosure defense attorney, Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia, P.A. website at www.miamibankruptcy.com.