Best 5 reasons Why Mortgage Applications Get Rejected

The mortgage application is rejected by the financial companies due to several reasons. It may be due to insufficient fund in your bank account or high valuation of the property that you wish to finance.

The lender may also reject your application if you do not fulfill the eligibility conditions for the loan. Here are the top five reasons why mortgage application gets rejected:

1. Credit rating: the financial company will first look into your credit history and score. They will reject your application if you have a previous history of bankruptcy or have a poor credit score. They may also reject your application if you have some pending loans. They will look into all the types of loans in your portfolio. This includes the personal loans, car loans, credit card loans etc.
2. Your debt situation: if you owe too much money to different lenders then your application for the mortgage loan may be rejected. All this information is revealed by the crediting agencies. Therefore, if you want your lenders to sanction your loan then clear all your debts before approaching them.
3. Valuation of the property: make sure that the property that you want to finance is evaluated properly. The financial companies reject your application when your property is overvalued or undervalued.The property is appraised according to the location, conditions of the house and the amenities the property provides. Your lender will send their experts to appraise your property. Therefore, find out the correct market value of the property before you place your mortgage application with any financial company.
4. Funds in your account: your lender wants you to have some money in your account for the down payment. They do not sanction the full amount. You are expected to pay about five to twenty five percent of the amount from your wallet.You are also required to pay the fees for the loan application. The company will thus look into your bank account to ascertain that you have sufficient money for all these type of payment. They will sanction the loan amount only if they are sure that you can pay them their fees and sign the down payment cheque.
5. Low income: the financial company will look into your repaying capacity. If you do not have sufficient income or fail to give them the income proof, they will reject your application. This happens if you apply for the loan which is twenty eight percent higher than your income. Look into such conditions before applying for the mortgage loan.