10 Ways You Can Ruin Your Chance of Getting a Home Loan Acceptance

In today’s expensive world it is difficult to buy a home, but lenders have done a lot to try and make it easier, especially for first-time homebuyers. There are some things that you need to take a look at before attempting to get a home loan because these top 10 ways can ruin your chances if you don’t have your ducks in a row.


  1. Debt10 Ways You Can Ruin Your Chance of Getting a Home Loan Acceptance


Adding new debt to your life before applying for a home loan can ruin your debt-to-income ratio and will make it difficult for a loan officer to assess how much you have to pay off each month compared to how much you are making. If your debt is higher than 43% of your income you will be considered a risky borrower and likely lose the opportunity to be approved for a home loan.


  1. Credit-Forgetting to check 


Your current credit score is a big factor in whether or not you get approved for a home loan. This is what lenders use to determine if you are responsible in your payments as well as your debt-to-income ratio. It is important to check your credit score yourself before applying for a home loan.

  1. Bill History


Part of what comes up when researching your credit score is your payment history. You do not want to have any negative marks on your payment history. Lenders like to see that all payments are made on time, otherwise, they will assume you are a risky borrower and would be late on your mortgage payments.


  1. Maxed Out Credit


Although you need to have a debt to build your credit, lenders do not want to see anything maxed out. This is a cause for concern to them and will also hurt your credit score.


  1. Closing Credit Accounts


Closing a credit card or line of credit can actually sometimes hurt your credit because your debt-to-income ratio is automatically higher and this lowers your level of available credit. This makes that credit score dip down rapidly.

  1. Switching Jobs


If you recently switched jobs or are in the middle of that process while trying to apply for a home loan you will likely be turned away. Lenders want to see that you have a stable source of income and can afford to pay your monthly mortgage.


  1. Making a Large Purchase


It isn’t wise to buy something big right before trying to buy something as big as a house. A home loan is the largest loan you will likely ever apply for. Buying something right before will lead a lender to reject your mortgage. They want to know that you have a lot of cash on hand when trying to buy a house.


  1. Spouse or partner has bad credit


This one is tough. You need to make sure that both of you have excellent credit scores before going to a lender to apply for a mortgage. Work on improving your scores together before applying for the loan.


  1. Co-Signing on a loan


Think this one through carefully! Co-singing on a loan means that you are partially responsible for that debt and if the primary borrower can’t keep up then this affects your credit score.


  1. Making large deposits


Family can help you with the purchase of your home but you need to be cautious with this. Money that is given to you can be taxed if you aren’t following the specific rules to gifting money. Large deposits into your bank account before going to a lender for a mortgage doesn’t look good and lenders want to see that you have had a substantial amount in the bank for a few months at least.


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