Every application goes through a series of assessment procedures before final approval. A mortgage application is an official document -manual or electronic- submitted to a Mortgage lender, which contains all the required information, including those of the intending homeowner and the property to be purchased. These will be considered before the processing of the loan is kickstarted. The information required is usually extensive, which isn’t surprising considering how large mortgage loans are generally. The lender needs all these to be certain of how credible you are, to know if you can genuinely afford the purchase, and to an extent, to convince him of the loan being repaid as agreed. Wondering why your mortgage application could get denied?
If you’re looking to take out a mortgage, you should be adequately equipped with knowledge about all that is required. Right from the application stage ensure that you’re on the right track.
The information contained in a Mortgage application
Along with the basic information you’ll provide on the application form, there’ll also be the need to provide additional documents to prove their credibility. Your lender will walk you through the application for a clearer understanding, but it’s mostly going to be about the following basically:
This includes your name, address, contact, marital status, social security number, etc.
The lender will verify all the personal information filled out with the additional documents you’ll provide.
The total monthly expenses regularly expended from your gross income and how you earn it needs to appear on your application form.
Basic salary (minimum payment for your current position)
Base salary(minimum regular pay including all incentives and extra commissions earned)
Bonus/overtime commission and its frequency
● Employment Status
Your employment state is a crucial part of your mortgage application. It justifies where your current income comes from and shows where you’re going to get the funds to repay your loan.
The section where you fill out this info will include:
The name of the employer
Contact info of the employer
Your job title, your field, and your position at the place of work
The time duration for such work, when you started, and how long you’ve spent at your current position. You’ll need to fill in information about any previous engagement or employment you’ve held before the current one in some instances.
If you’re an entrepreneur or a business owner, you’ll be required to provide your financial statement and the details of tax returns for your business accounts.
● Other details on the application form will include:
A comprehensive listing of all your assets such as investments, personal businesses, cars, etc., with a compilation of their current market value as well.
A listing of your liabilities (financial: obligations, debts, or responsibilities, owed other than that of the loan you’re seeking).
Information about the type of loan and other details about the transaction will be filled in by the lender on the same application form. Then specific declarations are required by the lender and your signature.
Why your mortgage application could get denied?
There are many reasons why your mortgage application could get denied. Your application is not the only thing that a lender checks when you’re applying for a loan. In fact, every piece of information on the application will be backed by verifiable documents and contacts. Which will all need cross-checking for credibility.
Some of the things that could prevent you from getting that mortgage application approved include:
- Having a bad credit score
A credit score is a number that shows one’s likeliness to repay debts. A bad credit score might be a significant reason why an application is denied. Having an acceptable credit rating, on the other hand, will help boost your chances of getting your mortgage loan application approved.
- You can’t prove:
Your source of income
How your current income will cover the loan you’re applying for.
- Neglected errors on the application forms.
- You do not qualify for the type of loan you’re applying for.
- You’ve previously lost a home to foreclosure, etc.
How to improve your chances of getting your application approval
Now, after reading this article, you must know why your mortgage application could get denied. One of the best ways to improve your chances of getting your mortgage application approval is to understand all the information required before filling out and submitting the application. Organize all the necessary documents and make them ready beforehand. Then do your best to convince the borrower that you can meet up the payments. You should also try to be aware of the criteria that the lender you approach is most particular about and work on getting them. It sometimes differs from others. Get the option to choose from good lenders today by contacting a qualified agent here.