Why Can I not Qualify for a Home Loan? Here are The Top Seven Reasons!

If you are wondering why you can not qualify for a home loan then you are not working with a good mortgage broker. A great mortgage broker will tell you why you are not qualifying and even help you repair your credit and improve your financial standing so you can qualify. Lending standards have tightened becuase banks do not want to make the same mistakes twice and lend money to people who can not pay it back. So read through to learn about the 7 reasons mortgage requests are being turned down in 2011.

1. Poor credit: Even with cash for a down payment you better come to the table with a  credit score of 693, according to CNN Money. Since 693 is above the national average it is clear that banks are only looking to lend to above average borrowers.

2. Insufficient liquidity: You may not want to put 20% down, but unless you have some substantial cash in your accounts in reserve do not expect to get a mortgage. Banks want borrowers who are as invested in their own homes as they are.

3. Lack of income: The recent economic downturn hurt a lot of people financially due to job loss. Unfortunately the bank wants to lend to those who can show multiple years of steady employment. This can be a big hurdle in the loan process, particularly for retired borrowers.

4. Lying on the application: Banks have learned their lesson and are no longer putting up with borrowers stretching the truth on their applications. Mortgage brokers have also taken note and are requiring actual income documentation now.

5. Debt: Borrower that are carrying extra debt (credit cards, personal loans) and have an unfavorable debt to income ratio are being denied loans. Talking with your broker can help you identify the fastest way to balance your debt to income ratio.

6. Unemployment: We are back to point 3. Banks want to lend to people they think can afford to pay it back. A big part of that is a steady job.

7. Self employment: Lenders are looking at self-employed applicants with a lot more scrutiny these days. be prepared to show tax returns and income statements. You reduced your self employed taxable income, but did you hurt your chances of getting a home loan?

In most cases your mortgage lender should help you understand why you are not being approved and give you guidance on how to get approved. If they are not, contact me for recommendations, or visit my Cincinnati mortgage resources page. More information on this available at RSI media.

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