To buy a house or to rent, that is a question all householders had faced with. They would always take careful consideration before making the final decision. It always involves the ability to afford a house and if they are really prepared for it. Once the decision is made, what need to be done next is the preparation for financing of the loan, and prove to the lender that you have the ability to loan and the ability to pay it out. For the loan application review, some get passed easily, however, some were rejected, why? You may find the 5 major reasons as below:
1. Bad credit The lenders are less likely to lend to people with low credit score. If the loan company does not mind about the bad credit history of the borrower, then it very possible that they will rise the loan rate or make rules that not good for borrowers. Even if you have been bankrupt or have had a foreclosure in the past, the status of bad credit will not be always the same. It’s a good idea to check your free annual credit report and make sure it’s correct. Take efforts to reduce the balance of the loan and repay the loans on time will also help for increasing credit scores. You can check your credit score on the two website Experian or Equifax.
2. Unpaid debt
Applicants with too many unpaid debts are very likely get rejected. All lenders have a debt income ratio request for borrowers, if higher than that, your loan application will get rejected. Hence, it would be wiser if you pay off all your debt or increase your income before make your loan application.
3. Unrealistic expectations
It’s important to know the amount of credit you can apply for. The ability to pay depends on various factors, and it is important to understand your actual ability to pay before you apply for a loan. Find out how much money you can borrow and how much you will pay, and try to use the Free online mortgage calculator for help you figure out.
4. Employment concerns
Affordability standards are getting stricter. You must have enough income and it must be the right type of income. Lenders would much more prefer to lend to borrowers who are normal employees with regular and continuous income. For individual operator or people with fiduciary type of work, it may be necessary to provide a certificate that they have been making profits for at least two years. If your income is too irregular or your work experience varies greatly, it is very possible that your loan application might be rejected.
5. Fake assets
Luxury house and luxury cars that do not match wealth accumulation and income, high rating high loans, property rights and loan application time are too close. Mansion are under devaluation, the disposal risk is far higher than the general commercial housing, while the bank is generally requiring its borrowers to provide the invoices and credit card receipt, if someone else’s signature appears on the receipt, you are very likely get rejected.
6. Changing Bank policy
The loan policy of each bank is made by its’ head bank, and for the branch banks, the loan policy maybe varied by the bank management, as the people changing, the policy would be change as well, so it is important to know about the policy.
Hence, we would recommend you, before make you hand over your request, make your best application based on the factors listed above, make efforts to accelerate loan application and gain for yourself more chance to fulfill the dream of buying the house you want.