When you apply for a mortgage, there’s a good chance your application will be denied. Despite the rising numbers of mortgage approvals in recent months, lenders can still be pretty strict in approving mortgage applications. If your mortgage application is denied, don’t despair. There are a few things you can do to appeal the decision and improve your chances of being approved. Here’s some advice on mortgages that can help you get approved on your next application.
Common Reasons for Mortgage Application Denials
Mortgage application denials are not uncommon. In fact, according to a recent study, one in four mortgage applications are denied. While this may be disheartening news for those hoping to buy a home, it’s important to remember that there are often reasons behind mortgage application denials that can be remedied.
The most common reason for mortgage application denials is insufficient income. Lenders want to see that borrowers have a steady income that can cover the monthly mortgage payments. If your income is unstable or you’re self-employed, you may have a more difficult time getting approved for a loan.
Another common reason for mortgage application denials is having too much debt. Lenders want to see that borrowers have a manageable debt-to-income ratio. If your debts are too high, you may need to pay down some of your debts before you can qualify for a loan.
Improving Your Chances of Getting Approved for a Mortgage
The mortgage application process can be a daunting one, especially if it’s your first time applying for one. If you’re looking to improve your chances of being approved for a mortgage, there are a few things you can do. Here are three tips to help you get started:
1. Check Your Credit Score and Report
Before applying for a mortgage, it’s a good idea to check your credit score and credit report. This will give you an idea of where you stand in terms of creditworthiness and may help you identify any potential red flags that could lead to your mortgage application being denied.
2. Pay Down Your Debt
One of the main factors that lenders look at when considering a mortgage application is the applicant’s debt-to-income ratio. This is the amount of monthly debt payments you have compared to your monthly income. The lower your ratio, the better your chances of mortgage approval.
3. Save for a Larger Down Payment
Another factor that lenders take into consideration is the size of your down payment. If you can afford to make a larger down payment, this will increase your chances of mortgage approval.
4. Choose a More Affordable Home
The price of the home you are trying to purchase will also affect your chances of mortgage approval. If you are realistic about what you can afford and choose a more affordable home, this will improve your chances of getting approved for a mortgage.
5. Have a Strong Employment History
Lenders like to see a strong employment history when considering a mortgage application. If you have been employed at the same job for a long period of time or have a history of steady employment, this will improve your chances of getting approved.
6. Make a Larger Down Payment
As we mentioned before, the size of your down payment can have an impact on your chances of mortgage approval. If you are able to make a larger down payment, this will show lenders that you are a low-risk borrower and are more likely to repay your loan.
7. Get Pre-Approved
Another good way to improve your chances of being approved for a mortgage is to get pre-approved. This means that you’ve already gone through the application process, and the lender has given you tentative approval based on their initial assessment. This can give you a leg up when it comes time to actually apply for the mortgage, as the lender will already have an idea of your financial situation and will be more likely to approve you.
Conclusion
It’s important to understand the factors that lenders consider when making their decision. Following these tips can help you improve your chances of being approved for a mortgage. However, it’s important to remember that each lender has its own criteria, and there’s no guarantee that you’ll be approved.
Now that you know what it takes to get your mortgage approved, your next step is to find a loan that suits your needs. Everest Mortgages is here to help you assess your finances to understand what deals are right for you. Through our friendly and professional independent mortgage advisors, you can rest assured that we will find the best deal on the market for you. Reach out to us today so that we can process your application.
