Home Loans CA: What Prevents Them from Getting Approved?

Interested in getting a mortgage loan for that beautiful house located in that esteemed neighborhood amidst lush greens? Or maybe you just want to get a home because the rates are incredibly low right now and you do not want to miss this once in a blue moon chance? Whatever your reasons and needs are, before you get caught up in the mortgage loan process, keep one thing in mind.

A mortgage loan is vastly different from other loans that exist and until you are completely aware of what’s required, there is a high chance that your lender might deny your application. Though there are many factors that can lead to a no approval, the most common ones are discussed below.

Bad Credit Score

Your credit score and rating is the most fundamental factor through which a lender analyzes if you should be granted a loan or not. As you already know, it is a figure which represents how you have handled your debts in the past. Your lender uses this to determine if you are worthy enough for another loan or if you would just default on it in future.

A low score will definitely not get your application approved. For other things, your lender may compensate in some way, but for a bad credit score, there is no way that your lender will provide you with a home loan.

So before you submit that application, ensure that your score meets the requirements set by your lender. You should also avoid things that reduce your credit score such as delayed payments and loan defaults.

A Low Down Payment

No mortgage loans have ever gotten approved without a down payment that is above a certain limit. There are variations in this regard because every lender determines this limit on different basis. As such they differ with each lender, but should be at least 3.5% to 5% of the total home value. Obviously, if you can afford a higher down payment, your chances of loan approval will improve and you might be able to enjoy lower interest rates as well.

Not Getting Mortgage Pre – Approval

If you have not acquired a mortgage pre – approval prior to submitting your actual mortgage application, there is a chance that you might be denied the loan. However, if you have this document, not only will the mortgage process be simpler, but it will also help you in acquiring the loan.

Other than this, a mortgage pre – approval has other advantages as well. For instance, you are aware of your budget and you search for houses that you can afford, saving both time and money.

A High Number of Debts

While your debt balance does not exactly needs to be zero, it should still be as less as possible. Debts include all loans that you have currently availed and the amounts that you have borrowed off your credit cards. A lesser number of debts is what you need to qualify for the loan, and also for acquiring the maximum possible loan amounts.

On the track with a good credit history, an adequate amount of down payment, a mortgage pre-approval, and manageable, and well maintained and paid off debts; you will face no problems whatsoever in easily getting a loan approval.