Top Five Reasons Why Mortgage Applications Get Rejected

Are you applying for a new mortgage or a mortgage refinance? Its all too common a situation when you have applied for a mortgage with all the hope of moving into that new house only to find out that your financial institution has turned down your application for a mortgage refinance. All those dreams of a new home come crashing down in flames. This need not be your experience if you learn how mortgage issuers work and play along their instructions and guidance. So, what can you do?



Listed here are the five most common reasons why your mortgage or mortgage refinance application gets rejected - and some of these issues raise up right before you think you're about to the cross the finishing line and move into your new home. By avoiding these five traps, you stand to have a better likelihood of actually having your application for mortgage approved.



1. Low Credit Rating



Do you know the first thing a mortgage lender will do when you ask them for a loan? One of the first thing the mortgage lender will do when you submit your loan application is to check your credit ratings. Checking your credit report is quite easy for a mortgage lender. They can even get your credit rating from all the three crediting bureaus. If you're already experienced a bankruptcy, your application for a mortgage might already be a longshot. Even things like late payments can be too bad. Everything is checked - car loans, personal loans, credit card loans, etc. You might not believe it, but lending institutions could go as far as looking into your student loan repayment before deciding on whether they should give you this mortgage or not.



2. A High Priced Property



A seller might consider their property valued at a premium. This could be because of several factors like location, amenities, condition of house, etc. But the lenders might find such high prices quite unrealistic to finance for. If there's a property whose worth is just about 100,000 in the market, but someone is wishing to sell it for 500,000, then no seller would want to come forward to finance it. This is one more reason why mortgage applications fail.



3. Appraisal Value of Property is Low



This ties in with the above point, actually, but it is different. When you make a mortgage application, the lenders will send their experts to the venue to check out the property and to assess its market value. This step is called as appraisal. Many times, the mortgage application is rejected at appraisal because the value of the property is assessed to be lower than what is applied for.



4. Insufficient Funds in Bank Account



You are not going to get all the funding for the property from the mortgage. You will get approximately 75 - 95% of the property cost and need to make up the difference from your own assets. Plus there are the fees due at closing to consider. The lenders will dig into your bank account for these fees. If you do not have the right funds ready for them, they will reject. Many times a lender will look at your banking accounts and make the determination that you don't have enough in cash to cover your portion of the loan plus the charges for closing.



5. Too Much Debt



Reeling under too much debt is never healthy, and not at all in case of a mortgage application. If you have too many loans that you are somehow juggling, the lenders would not like to burden you with another. Your level of debt can easily be see on your credit report.



For more information about mortgage refinance options in Austin, Texas check out Austin Mortgage Refinance.