It’s no secret that mortgage lenders have been tight fisted with their money since the mortgage and real estate crash of 2007-2008. As such it has been more difficult applying for a mortgage to buy a house in recent years. Some of this difficulty comes from tougher lender guidelines/scrutiny, but some of the difficulty comes from your behavior.
In general, in order to obtain a mortgage, you must have a certain amount of money down, some type of steady income, and a stable credit history. Even so, you could find yourself unable to get approved for a home loan due to some things that you may not have considered before.
Many buyers put off buying things on credit for some time before they apply for a home loan. The problem is that once they apply for a mortgage, many people feel it is then safe to do so. That’s not necessarily the case, because many financial institutions are now running brand new credit checks just before they issue a mortgage. If there are new items listed, it can be a deal breaker in many instances.
Some lenders are also requiring buyers to have funds in reserve before they can obtain a home loan. Applicants who do not have an IRA, 401(k), CDs or a hefty savings account could find themselves denied. The reason is that lenders worry about individuals being able to pay their mortgage should they suffer a job loss or other devastating life-changing event.
If the bank’s appraisal shows the home is worth less than originally thought, this could also cause a mortgage application to be denied. Most lenders are only willing to approve loans that are 80% or less of the home’s value. As a result, many people could find themselves needing a larger down payment than they originally anticipated; they could also be denied a mortgage outright.
Potential buyers are turned away every day because they have not been with their present employer long enough. That may seem unfair given the fact that recent economic conditions have resulted in thousands of job losses, but that’s nonetheless the rule in a lot of situations. The good news is that a two-year requirement does seem to be a thing of the past, and six months of job stability is typically considered good enough.
Changes are constant in the field of mortgage lending. Keeping up with the changes can be stressful, which is why getting prequalified for a home loan is highly recommended.