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When reviewing mortgage applications, lenders consider many factors to determine creditworthiness. That means even if you have a significant income and a decent score, you’re not guaranteed to receive financing. Thankfully, you can reduce your chances of denial if you know why applicants fail in the first place.

3 Common Reasons Why Mortgage Applications Are Denied

1. Questionable Employment History 

Lenders typically want to see at least two years of steady income before they’ll extend financing. If there are long gaps in your employment—or you switched jobs several times over a short period, it will lead to questions about your financial stability. As such, wait to apply for a mortgage until your last two tax returns demonstrate a pattern of continuous work.

2. Thin Credit File

mortgageWhen it comes to home loans, having no credit is as problematic as having bad credit. If you've never taken out a loan before and don't have a credit card, the lender can’t confirm your repayment history. As such, they may be wary of extending financing, regardless of how much you make. To avoid rejection because of no credit, get a credit card, and use it responsibly well before applying for the mortgage. 

3. Low Appraisal Value

Sometimes, the potential borrower is reliable, but the property isn’t. Lenders do not allow borrowers to take out more than the property is worth. If the appraisal value is considerably lower than the purchase price and the seller refuses to renegotiate, you may still secure a mortgage for the appraised value; however, you'll have to find a way to make up the difference out of pocket.

 

To see if you’re ready to apply for a mortgage, turn to Dan Main in O’Fallon, MO. For more than two decades, this friendly mortgage loan officer has been helping clients purchase their dream homes. Whether you're building a new home or buying an existing property, Dan will help you navigate the application with ease. He also assists with refinancing current mortgages. To discuss your financial situation and determine the best way to proceed, call (636) 284-4144 or visit them online for more information about their services. 

Dan Main: NMLS # 502036
Flat Branch Home Loans: NMLS # 224149
201 Salt Lick Rd
St. Peters, MO
This is for informational purposes only and not an offer to lend or extend credit.

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