Rejection of one's mortgage application can be a frustrating experience. But what are those said reasons that lead to your application being rejected? Are those said reasons should worry you much? And what can you do to avoid those hindering your next mortgage application?
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Some Known Major Reasons as To Why Your Mortgage Application Can Be Rejected
When it comes to the mortgage application, it usually undergoes many processes before it becomes approved. According to Smart Investor, there are several major reasons as to why your mortgage application will be rejected by your local bank. Listed below are those said reasons that may surprise you:
Your Debit Service Ratio isn't on the positive side - this reason is one of the immediate things that most mortgage lenders will check into one's history of dealing with loan debts and payments. It is much akin to the credit score of a credit card and cash loan, wherein lenders will check your ability to repay. Therefore, it is best to have a good Debit Service Ratio (DSR) on your record.
Having improper and messy documents isn't a good look - aside from your DSR records, another thing that most mortgage lenders will check are your documents. Having organized and proper documentation can lead to a higher chance of your application being approved.
Apply for a loan at the right moment - this applies usually for most fresh graduates from their respective colleges that are either applying for a mortgage or credit loan. This is a big no-no, as many lenders (including mortgage lenders) would want to see that you (as the applicant) has enough positive credit history while being permanently employed. They usually want to see a 3 to 6 months minimum continuous payslip history from the applicant's employer/company.
Never go bankrupt as it will stain your good record - one major reason for lenders rejecting your application is that you have declared yourself bankrupt or soon to be bankrupt. Another big no-no when it comes to applying, this one is particularly obvious as to why it is a major reason for rejection.
Avoid issuing a bad check as much as possible - this is a common mistake by lenders when applying and paying their loans. If your issued check bounced back three times, that would be a red flag for the lenders and to your credit history. It is best to issue a check that will not bounce to avoid this problem.
If My Mortgage Application Was Rejected, Will I Know About It?
When the inevitable comes your way and your mortgage application was sadly rejected, will you be able to know the reason why it was rejected? According to the Experian, yes, you will know why your mortgage application was rejected.
According to the law, you are entitled by default to be notified and informed on the possible reason(s) as to why your application was rejected. Usually, the rejection will be in a form of a declination letter that will be physically sent to your address. The said letter must provide some vital information for the reason for your application's rejection and you are entitled to have a free credit report along with it.
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