Once you apply for a mortgage, you may think you’re out of the woods. However, you may still receive an unwelcome notice: a rejected mortgage application. If you want to prevent yourself from this unhappy result, make sure that you address these causes for rejected mortgage applications—and do so before you apply.
- Changes or gaps in your employment history. Whether you like to switch up your job situation every once-and-a-while, recently found a new career, or have gaps in your employment history, this may spell trouble. Why? Well, for one, it’s among the common causes for rejected mortgage applications. You may be one of the most reliable people around, but your job history could convey a different story, instantly dashing your chances to own the house you want. In fact, the rule of thumb is to display two consecutive years working at the same place. Still, for those who haven’t yet left their jobs, you may still be able to salvage this. All you have to do is keep working until you have an approval. Then, feel free to switch careers.
- Someone surpassed your down payment offer. Higher down payments—and ones in pure cash—can often sway buyers’ favor. Consider getting a consultant to help you figure out how large of a down payment offer that you can manage. Then, offer it. If you’re nowhere near applying for a mortgage, take this as a sign to amp up your savings. This will help your chances in the long run!
- Poor credit score. Society often drills into us a false narrative about credit cards, deeming them as tools only to pull out in an “emergency.” While the credit card makes for a great tool in pop culture, you shouldn’t ignore just how important it is in everyday life. Your card will allow you to build your credit score—provided you pay off purchases in a timely manner—and show companies just how reliable you are financially. Don’t neglect the importance of recording a consistent credit score.
- You don’t look at yourself from an outsider’s perspective. You may believe that you’re the best possible candidate, but it’s easy to get overconfident—especially if you’re new to the process. This blind spot can hinder your success—and keep you from getting your dream house. When you’re putting together a mortgage application, look at yourself from an outsider’s view. Then, ask yourself, “If someone like me applied for a mortgage, would I trust them unequivocally to pay their mortgage over time—and consistently?” If the answer is no, get to work on changing this fact! You can also consult a financial expert to help you along the way.
Learning this common causes for rejected mortgage applications can teach how to view your own apps with clarity. Finding a place to hang your hat is important—so make sure not to accidentally sabotage your chances at a great home. Luckily, with time, patience, and foresight, you can correct your course.
Still waiting on finding the right home before you apply for a mortgage? Ryan Roberts has plenty of properties in the Auburn, Lake Martin, and Opelika to help you on your search. Simply call him at 334-750-9872 or email him at [email protected] to begin. As for learning more about the buying—and selling—process, continue to check out our useful blog.