Rejections for loan applications are moderately high. According to The Washington Post, in 2015, 1 in 8 applicants of home loans got turned down. We know that it’s devastating to have your mortgage request turned down and, in a bid, to help you evade that, we came up with a list of the reasons why your mortgage loan al could be placed on the rejection pile.
One of the top reasons is; if you hold or held too many jobs in the past two years. In the recent mortgage rules, it is crucial that an applicant be able to show that they have been employed consistently for the past two years. However, some lenders require that the borrower to have held the same job during for the two years. This is because hopping from one employer to another is a sign of instability in your employment history. However, you need not break a sweat if the change in jobs was after a promotion or to stretch your wings in your field. Another reason is if you owe money in the form of alimony or child support. This is because, it is considered as debt which in this case, is supposed to be stated in the mortgage application. In most cases, lenders find out. In fact, some go to the extent of contacting courts and lawyers to establish whether the applicant is married or divorced and, in this case, whether they owe child support, court-awarded judgment or alimony.
Believe it or not but getting approval for a new credit card is reason enough to have your loan application rejected or have the process slowed down. Why is this? This is because it will indicate a shift in your credit availability or the debt you owe, and this may dampen your chances of landing the mortgage. Borrowing money from family members or friends to raise the down payment is also a reason to expect rejection. In such a case, it is very common for home buyers to pass off such a loan as their own. However, lenders go through the sources of the down payment funds with a fine-tooth comb. If they catch wind of you have borrowed the money, the chances are that your loan application will be rejected.
Brace yourself for this. Borrowing too little is also a reason to have your loan application rejected. In as much as giant loan applicants might find it hard to have their loan requests approved, small loan applicants also face the same predicament. Why is this? This is because it will cost the lender as much money to finance the small loan as the large one. However, the interest that will be recouped from the small principal balance will not be worth the effort. Finally, underestimating your credit score is also a reason leading to rejection. According to Go Banking Rates, every person has more than one FICO score and the scores may differ. The score you receive might not be the same as the lenders.