Common Reasons why Home Buyers are Denied a Mortgage

Buying a home is a very exciting time, but it is only possible if you have the ability to secure a loan. A home is one of the biggest purchases that you will make, which means that you will typically not have enough cash to pay for the entirety of the transaction. This means that you will have to obtain a mortgage to cover the purchase. Getting pre-approved for a mortgage loan is typically the first step that you will take once you decide that you are ready to buy a home.

Before you even begin looking at homes for sale in Collingwood, you need to know the ballpark amount of the home you will be purchasing and what you can afford in monthly payments. Your credit is a major factor in your loan approval. This means that you need to be aware of the most common reasons why buyers are denied a mortgage in order to make sure that your loan gets approved.

Here are the common reasons why buyers are denied a mortgage even though they might have been pre-approved.

1) Requirements

There are different types of mortgage loans that you can qualify for and each different type of loan comes with different terms. This means that you must meet specific requirements in order to be approved for certain loans. Your pre-approval for a loan is contingent on those loan requirements staying the same. If those loan requirements change in any way, you likely will no longer qualify. This means that one of the main reasons why some people are denied a loan is due to requirements that change. It is important to remember that requirements for any pre-approved loan does change over time and are not always the same.

2) Debt

It is also important to understand that changes that happen during the time of loan pre-approval and when you apply for a real loan can change the outcome. If you take on other types of debt during the period in between when you are pre-approved and when you apply officially, there is a good chance that you could be denied. Your pre-approval was contingent on the amount of money you owed at that time and changes involving the amount of debt that you have can change your approval. This means that I you want to avoid being denied, you should not take on any additional debt.

3) Employment

You also need to consider your employment when you are trying to determine why you have been denied a loan after being pre-approved. Your employment is a major factor in loan approval and any changes in your employment can have a huge impact on your ability to qualify for a loan. If you want to make sure that you still qualify for a loan, you must stick to the same career and not have any major changes with your employment during this time period. This is the only way that you can be sure that approval will be guaranteed.