10 reasons why your mortgage loan may be rejected

mortgage

Buying a home can be a very distressing experience for many people today. The criteria for getting a mortgage have become stricter. New rules are in place and many people fail to get their desired mortgage to buy home. According to statistics, millions of mortgage applications are rejected every year. So, before you apply for a mortgage, you need to learn about the whole procedure so that you can minimize your risk of getting rejected. Here are 7 circumstances in which your mortgage application might be rejected.

Switch jobs

You need to show proof of your employment for the past two years. Some lenders require that you must be on one job consistently for a period of two years at least. So, if you keep on switching jobs then your mortgage application may be rejected. Changing too many jobs indicate that you are unstable and might not be able to pay off your mortgage later on. However, if you have changed job to advance in your career or as a result of a promotion, then it won’t have any effect on your loan application. But if the change in job has affected your income negatively then there is less chance of your mortgage application being approved.

Get a new loan

Your credit history affects your mortgage application. If you get a new credit card after applying for a mortgage and before getting the approval, then there is high chance that it will take more time to review your application. Your application might be rejected as well. The same thing will happen even if you apply for a car loan while your mortgage application is being reviewed.

Close an unused credit card

It may surprise you knowing why closing an unused credit card will affect your mortgage application. The lenders look at your credit utilization ratio when giving you a mortgage. This ratio equals to the total amount of credit you have compared to the amount of credit you are using. So, if you close one credit account, your credit utilization ratio increases. As a result, your mortgage application may be rejected.

Change in mortgage requirements

Sometimes the requirements for obtaining a mortgage change.  For example, in the past, you needed to have a minimum credit score of 650, but now you need to have a score of 680. If you are not aware of these changes and apply for the mortgage then there is a chance that your application may be rejected.

Change in your credit report

Your credit report changes regularly. If you take an additional loan or fail to pay a month’s credit card bill, then your credit score will be affected. Missed payment or late payment of bills can lower your credit score and affect your mortgage application.

Buy a different kind of property

Lenders may be unwilling to give a mortgage for certain kinds of properties. These include investment properties and condos. To get a mortgage for this type of properties, you may need to give a larger down payment. So, before you apply for a mortgage for this type of property, you should ask your lender whether your condo is on their approved condo list.

Borrow the down payment

You should pay your own down payment, without borrowing money from elsewhere. If you buy the entire house on credit, you won’t feel back walking away without paying your loans as you don’t have anything to lose. But if you invest in your own house, then your money is on it. You will feel the urge to pay the mortgage on time so that you can be the owner of the property.

Borrow too little money

The minimum amount you need to borrow for a property is $50,000. Some lenders raise the minimum amount to $75,000 and even $1, 00,000. If you borrow less money then you will be paying less interest and the lenders will make less profit. If the lender sees that the risk of giving you mortgage is more than the profit they will earn, they might reject your mortgage application.

Loans went to collections

If your debts have ever gone to collections, it might hurt your credit score. So, you will have less chance of getting a mortgage approval. However, the information won’t be there on your credit report forever. You can talk to a credit repair firm and know what to do to improve your credit report.

Owe money for child support

If you owe money for child support or alimony, then it will be considered as debt. You should mention this in your application. The lenders will investigate your case and find out your financial status. You might need to have a higher credit score to be eligible for a mortgage if you owe money for child support. There is a chance that your mortgage application may not be approved.

You need to be honest about the information you provide on your application. You should provide your income information in detail, your credit score and other information so that the risk of rejection is low. If you have any red flags on your credit report, you should fix it before applying for the mortgage. You shouldn’t do anything to negatively impact your credit score when you apply for a mortgage, like getting a car loan or a new credit card. It is more difficult to get a mortgage today than it was before. The credit standards have been tightened. According to a statistics, only 55% of the mortgage applications are accepted today. So, you should prepare well before applying for a mortgage in order to decrease your chance of rejection.

 

How to Live a Financial Constrains Free Life

Have you ever wondered how best you would take care of your personal finances? It is quite simple. First, personal finances is all about how an individual acquires money, how they budget it and how they save it. lt also has a lot to do with the way you spend your money. It is important to be careful on how you acquire money, save and invest it. This is because there comes uncertain economic times where one can only survive on the money you saved or invested in.

Living Below You’re Means

It is indeed important to be effective in they way you obtain money, how you spend and save it. While making decisions on your finances it is important to contemplate about the future. That will determine how much money you need to make today. This will be better achieved if you have personal financial goals, for instance how much you want to achieve at a given period of time, how much you need to have saved for future use or during times of severe economic crisis and how much you would like to invest in.

living below your meansWhile investing in your earnings you should consider time value of the money you are investing in and how much you expect to get from your investment. For instance, if you buy land that will appreciate in five years, then that is a wise financial decision; whereas if you choose to invest in shares that do fluctuate and most of the time go down then you may end up investing in the wrong project.

In addition, it is of much importance to develop financial strategies to help achieve different life goals. For instance, if you have a family, you could invest in an education insurance for your children.

This will be ideal so that there will not come a time when your children will be out of school, for lack of school fees. You could also take up insurance for your house. This will be of essence in the event there is a tragedy and your car is crashed in an accident or your house catches fire; you will be safe and will be able to cope well with the situation.

The topic of personal finance basics could go on and on, but the bottom line is that how you spend your finances and how you acquire it, determines what kind of a life you will lead. Therefore choose wise ways to make your money and be keen on how you spend it. With that you will be free from financial constrains.

5 reason why you need to have good credit

Learning about what is a Good Credit Score

The economy today runs on credit, if you want a student loan, mortgage loan or you just want a credit card to pay for your lunch meals, a company will be giving you credit. Your credit score is defined by a three digit number that that determines the likelihood of an individual to pay back the borrowed money and it is the key to one’s financial life.

An individual’s credit score is calculated using his or her payment history, length of payment, frequency of loan application and the current debts. Since scoring systems use different criteria, the major credit bureaus may give different credit score for the same individual but the score will have the same credit information.

Why you need to have good credit

As stated above, loans are an important part in life, everyone needs to have a good credit. Building a high credit and maintaining it can have an impact in the quality of life now as well as in the future especially when you are considering applying for loans and prepaid debit cards. Here are some the reasons why you need a good credit score.

· When buying a house

Purchasing a house is one of the greatest investment you will ever make in your life but it can be hard to achieve if your credit score is not good. Even though the housing market has rebounded, lending companies are still very cautious and there are strict requirements in order to qualify for a loan and anyone with a bad credit history will not qualify for a mortgage loan.

Also, renting a home also involves credit check and if you have any delinquent credit, you may not be able to rent the apartment or house or you may be required to pay a higher deposit compared to a tenant with a good credit score.

· Buying a Car

What is a good credit score to buy a car? Cars are a common purchase and most people take loans to be able to buy the car of their dreams. Though car loans are smaller compared to house loans hence one can easily get even with a not so good credit score but a poor credit score will get you a car loan with a large down payment and higher interest rates on the acquired loan. This means that you will pay much more compared to another person with a better credit score.

After buying the car, you need auto insurance and almost all insurance companies factor in the credit score when calculating the premiums payments. Therefore, having a good credit will help you save on car insurance money as well.

· Starting a Business

If you plan to start a business and you need to acquire a business loan, the credit score is a major factor in determining whether you qualify for financing. Whether you are looking for finances to expand an existing business or you are looking to start a new business, your credit score will certainly affect your eligibility to get the business loan.

· Getting a Job

Employers today are now checking the credit history of prospective employees before hiring them. This is common especially in the financial sectors and government organizations. A negative credit history or score can keep you from getting that dream job.

· Getting Lower Interest Rates

While a good credit will help get access to most of the financial assistance in most banks but those with a bad credit can still get the loans. However, if you have a damaged credit score, you will need more documentation in order to get the loan and the loan will have a higher interest rate. This is what banks use to outweigh the risk of lending money to individuals with a bad credit score.

If you want to access bank loans with a lower interest rates, you should strive to keep your credit score high by making all your payments on time, paying loans before the end of the set period and paying the credit card in full.

A bad credit score indicate that you are a risky bet. It does not only show how bad you are with paying debts but it can also imply that you are as irresponsible in taking care of a rented apartment, driving the car or showing up for a job. A good credit on the other hand implies that your financial situation, as well as the rest of your life, is right on track. If you need help getting your credit back in order, you should look into creditrepair.com.

How to Make a Savings Plan

There are so many ways to make savings, how to make savings depends on you yourself. Saving is a way of putting aside a little amount of money for future use that you do not need to use or even spend one of the ways of making savings is to avoid debts ,often debts can cause you a great deal if not paid on time, for example, the bank loans if in any case the top loans is not paid on time, their way of payback is grabbing a very bigger portion of your property making the saving you had planned for useless.

Here is What You Need to Get Started

How to budgetHow to make savings is among the simplest tasks, it doesn’t need to apply effort but instead it only needs commonsense In saving money one needs to know how to spend the money and how to maximize the income too In making savings first record your expenses and know you rate of spending and so make the budget of every single cent you spend in order to avoid inappropriate spending .You can also set your goals for saving for example, saving money to buy a new car, paying taxes and even money for the emergency fund in case you lose a job Also prioritize on something to do because people have different priorities in everything they do and so it will make you save accordingly.

How to make transfers will matter in your saving, for example, choosing how frequently you need to transfer money and the accounts you’ll need to use for money transfer. How to make savings can be done through investing in the stock market. How to make savings can be done through minimizing the energy cost like switching the television and lights when you are not around to save on energy cost other than wasting it all. How to make savings? is that the case? then, it is already solved you can even hire your own children to do some simple jobs than paying other people to do it which is making the unnecessary expenditure.

How to make savings can also be done by saving on your studies or your children’s studies by exchanging books with others than buying new ones. Make your own food other than buying take away which are much more expensive unlike your homemade food which is relatively cheap. Always avoid unnecessary replacement by being cautious and take care of your property. Therefore how to make savings, depends on oneself decision.