Friday, October 28, 2011

Who does not cringe at rejection?..

Triggers for rejection. - Loan rejection that is.

Last year, more than two million people were turned down for homes, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more rigorous in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection.

• Insufficient income: well, this is straightforward… But also, lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.

• Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.

• Poor credit: Lenders typically reject applicants with FICO scores below 620.

• Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low. If this is the case, the bank will often loan less, which can create a problem for the cash-tight buyers.

• Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.

• Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

The full story can be accessed here.

If you need any lender referrals, don't hesitate to contact me. When you buy a home or refinance, you rely a lot on your loan agent.
Thanks for reading!...

PS:  Mortgage rates: Week ending 10/27/2011
- 30-yr. fixed: 4.11 fees/points: 0.8%
- 15-yr. fixed: 3.38 fees/points: 0.8%-
- 1-yr. adjustable: 2.94% Fees/points: 0.6%
(Source: Freddie Mac)

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