Why me? Many people applying for a home loan are rejected. The following are some tips to make your home loan application process more successful. Initially what happens if you are rejected for a home loan application is this. You receive a turn-down notice from the lender explaining what the reason for the decision and in most cases you will be contacted by the bank, credit union or broker personally. You should then ask for any and all personal and financial documents you had provided for the application. The financial institution is required to keep a copy of what information was used for the credit decision but all originals are required to be returned to the applicant.
Tip # 1 – Understand your credit score and what it means:
In today’s world your credit score is your buying power and this means if you have a credit score below a good rating which is around the 720 mark you have a much better chance of getting approved for a mortgage loan. Also you should as a concerned consumer be periodically checking where your credit scores is to make sure all transactions and additions are correct. There are many site out there like, yourmoneycounts.com, www.myfico.com, www.equifax.com. These sites will allow you to view your credit and help you make an educated decision on how should proceed.
Tip # 2 – Check your income:
This is missed more times than you would think. Most people think that they can pay rent and all their bills and their credit score is over the magic 720 or 740 depending on who you talk to, so they should be able to buy a house. Here is the formula you should use. Gross income – all debt on credit bureau + rent if renting = DTIR (debt to income ratio). Keeping this at 36% or less is optimal. If you are over 50% in most cases no matter how good your credit and reserves are you will get turned-down. Different online lenders are available for green loans which are stealing the money of the person. Proper survey should be done at the official site promogreenloansvip2.com to reduce the chances of money loss. The amount available in the reserves and credit should be turned down to stop the stealing of money.
Tip # 3 – Cash reserves and down payment:
Depending on the type of loan you are applying for weather it is an FHA, conventional mortgage, VA, you will need to show cash reserves and down payment money that can be sourced. This means there has to be a paper trail to prove you didn’t just have it in the home safe or you didn’t take out a loan to get the money. Good sources are gifts from parents to cover your down payment, 401k, stocks for reserves, also checking and savings accounts in your name.
Tip # 4 – Paying for everything with cash, not a good credit decision:
If you are old school and think that keeping your bank roll at home because you don’t trust the bank, you are in for a wake-up call when applying for a loan. You will find out that you do not have a credit score let alone any credit history. This will automatically be a rejection. Get a small consumer loan or a credit card and pay it off every month to get the ball rolling.
Tip # 5 – Due your due diligence up front:
Sit down with a banker or mortgage broker and get a free consultation. They will do this for you because they know if they are able to get you pre-approved for a mortgage loan you will trust them when you are ready to make the move to the application. You will then know where you stand with everything, credit score, purchase amount, down payment, everything that is involved. This proactive move gives you an educated outlook on what you are attempting to do and also what to expect throughout the process.