3 Reasons Why Your Home Loan Could Be Denied


One of the most time-consuming parts of buying a new home will be securing your financing. With several steps in the process, it's possible for something to go wrong during any of them, leading to your home loan being denied. While you have control over some factors, others may not be apparent until after the home-buying process has started. Be aware of these three issues so that you are not caught off guard by a sudden home-loan denial.

The Home Inspection Comes Back Bad

It's typical for a mortgage lender to want to see the results of your home inspection after you have it done. The inspection is what allows you to get a professional look at the guts of the home, and it is typically one of the last chances you have to back out of the deal in case you find something you do not like. The mortgage lender wants to look at the home inspection for the same reason.

Since it's possible that the lender may get the property back if you default on the loan, they want to loan money for a home that is in good shape. For example, if the inspection finds major foundation damage, then your loan could suddenly be denied.

The Home Is Under-Appraised

Near the end of the home-buying process, your mortgage lender will have an appraisal performed for the home you are buying. This step involves having an independent contractor give their assessment of how much the home is worth. The goal is to see if the home is in the price range of what you ended up paying for it.

Once again, the mortgage lender technically owns the home until your mortgage is paid off. If you overpaid for the home based on the assessment value, the lender may not be comfortable giving you a loan that is more than what the house is worth. You may be required to pay the difference so that the mortgage is only worth the value of the home or your loan could be denied.

You Make Big Purchases Before the Mortgage Is Finalized

Your credit is pulled at the beginning of the mortgage process, but your lender may do it again before they finalize the loan. This is because they want to ensure your debt-to-income ratio is still the same and that you haven't gotten another loan or haven't had any blemishes added to your credit report since the process started.

Some homeowners decide to get a head start on their home renovations by opening new lines of credit and making big purchases at local home improvement stores. Even though you have good intentions with this kind of purchase, the lender may view you as a risk and the loan could be denied.

If you want to make sure your loan goes through, be sure to work closely with your mortgage lender throughout the entire process so you can be prepared for any of these situations. Find a lender through a company like Premium Mortgage Corp and ask them about all the factors you should be aware of before you try to take out the loan.


12 May 2016

saving money while financing a family vacation

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