Mortgage Blog
What steps should you consider if you get declined by bank?
December 3, 2024 | Posted by: Sarabjit Dhuna
In recent years, getting rejection from bank is increased. However, it does not mean that you are never going to get home. In this article, i will mention about what is reason behind rejection and what options you have to get mortgage approval.
Reasons Behind Rejection
Let's Dive into what are reasons behind bank’s rejection
Low credit score and insufficient credit history: - Your Credit History and score determine if you are eligible for mortgage or not. Most of the traditional lender or bank prefer to have more than 650 credit score for mortgage approval. You can check Equifax and TransUnion for credit score and report.
Employment income: - income instability is roadblock for mortgage approval. Bank wants to make sure that you can afford the mortgage payment. Employment income stability is very important for lender to give approval for mortgage.
Debt and LTV: - Your remaining substantial debt is also problem to get approved. If LTV is more than 80% then it also problem for getting mortgage. If you have debt like car loan, student loan, credit card debt can also red flags for getting approval from bank.
Down Payment: - Insufficient down payment is roadblock for getting mortgage. According to new rules from government
Minimum payment for house are as follow
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5% down payment for 500,000 or less.
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10% down payment between 500,000 to 1.5 million
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20% down payment for more than 1.5 million house
Property: - sometimes it also depends on property as well. Property valuation does not equal to loan value. Property is really old and in poor condition.
What next step you should consider: -
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Ask Specific reason for decline by bank. When you identify issue then try to resolve that issue
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You must improve your credit score and reduce current debts.
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You must also consider b-type or private lenders.
Consider Different options: -
B-type Lender: - These types of lender have less strict rules compared to bank and required average to good credit score.
Private Lender: - They charged higher interest rate but can work with bad credit and income instability.
Rent to own program
Credit union: - they are more flexible than big 5 banks.
If you have any questions regarding mortgage then contact me and i will try to give you lowest interest rate.
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