10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

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10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

Qualifying for a mortgage should not be complicated, and there are numerous articles written about how to get approved. What’s not talked about as much is why a lender could decline a mortgage application. If only one of the following applies, it’s very likely you can still get a mortgage. However, when your financial profile fits under more than two of the categories below, it could be more challenging for you to obtain mortgage financing approval.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

1.   THIN CREDIT

A reliable indicator of a good solid credit score is two years history of reporting on at least two debts. If an individual is short on reporting accounts, some lenders may consider alternative documents to support positive repayment habits. Six months of cell phone payments, car insurance or utility payments could be requested to demonstrate credit. If unable to show any history of past debt repayment, you may have to provide a larger downpayment or be asked to bring on a strong co-signer.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

2. POOR REPAYMENT HABITS

If a borrower has weak repayment skills, the potential lender will be looking for strength in other areas of the application to confirm mortgage payments will be made in a timely manner. Dependable income source(s), a larger investment through increased downpayment, and/or a co-signer can all add strength to an application with a bruised credit component.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

3. DOWNPAYMENT SOURCE

Lenders become a little wary of borrowers purchasing a home using a downpayment solely sourced from gifted or borrowed funds. The rationale behind it seems to be that it is easier to walk away from a property when there is no investment of personal cash into it. It’s not surprising when a lender requests a portion of the downpayment come from the borrowers own resources before an approval will be extended.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

4. LACK OF SUPPORTING DOCUMENTS

Mortgage lenders must have sound lending practices, and one way they do this is through the collection of documents proving a borrower adequately qualifies to successfully repay mortgage financing extended to them. If a borrower cannot provide paperwork confirming their financial picture that is acceptable to the lender, they are usually referred to an alternative or private lender that has fewer requirements.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

5. BORROWING TOO MUCH

Too much financing is not a good thing. Lenders have preset qualifying guidelines which prevent lending borrower’s amounts where they can’t afford the payments. If attempting to borrow more than they can repay, a lender may request a larger downpayment to make the mortgage amount more manageable or decline the application for lack of affordability.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

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6. THEY DON’T LIKE THE PROPERTY

Unique properties tend to create problems in the eyes of a lender, as they are looking to lend on properties that appeal to larger demographics. Age restriction, partial commercial component, previous grow-ops, black mold and mobile homes are features that could prevent a property from getting the stamp of approval. If you’re interested in a property that does has some unique features, run it by some potential lenders before you submit an offer to ensure there are financing options available to you.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

7. THEY DON’T LIKE THE LOCATION

A property located in an isolated area far away from a major city center can also present some financing challenges as not all lenders like all locations. If looking to buy in a remote area or community, ensure all other features of your mortgage application are strong.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

8. OVEREXTENDED BORROWER

Owning a home can be expensive, there are closing costs when you buy, potential repairs after you own and ongoing maintenance which keeps costing you money. As a result of this, lenders will be looking for a borrower to have the ability to cover these expenditures. If maxed out on all available credit lines and using up all savings for downpayment, the lender may be concerned about the lack of funds leftover after purchasing a home. Increase the likelihood for mortgage success by always keeping some money in a savings account, and make sure to avoid an unmanageable debt load.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

9. LACK OF HOME EQUITY

When purchasing a home to owner occupy, a minimum of 5% downpayment is required, and the remaining 95% of the purchase price can be financed. However, if you are considering refinancing a property you already own, you can only borrow up 80% of the home value less any existing outstanding mortgage balances. If you’ve received a decline because of not enough quity or downpayment, there are some private or alternate lenders who may lend you more. Though the interest rate will likely be higher and there could be upfront fees charged as well.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

10. DISHONESTY ON THE APPLICATION

Intentionally falsifying documents or application details will most often result in an immediate decline from the mortgage lender. Whether it’s at the beginning of the transaction, or days before closing when signing documents at the lawyer’s office, the lender has the right to withdraw their financing approval if any misrepresentation is discovered at any stage of the mortgage process.

10 REASONS WHY A MORTGAGE IS DECLINED

J a c k i e W o o d w a r d T M G T h e M o r t g a g e G r o u p

M o r t g a g e g i r l . c a 7 8 0 - 4 3 3 - 8 4 1 2 i n f o @ m o r t g a g e g i r l . c a

It’s not difficult to get a mortgage if your financial profile fits into the right boxe,s as there is a combination of guidelines that must be met in order for a borrower to be eligible for a mortgage approval. Property, income, credit, net worth, and mortgage amount compared to home value, are just a few of the most important details considered when reviewing a potential mortgage application. Increase your chances of an approval by being a low risk borrower with a strong financial profile. Working with an experienced mortgage professional who has access to multiple mortgage lender options also increases the likelihood of a positive response.

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JACKIE WOODWARD Mortgage Consultant TMG The Mortgage Group Visit: mortgagegirl.ca Call: 780-433-8412 Email: info@mortgagegirl.ca Follow @mortgagegirlca