If you need a mortgage to finance your first home or refinance, you must fill out a loan application. Besides your good credit history one additional way you should be prepared to get the best mortgage loan deal that you can is by understanding the loan application process and not make costly errors.
Here are some tips on the things that can cause a mortgage lender to reject your loan application.
The first thing that can get your loan application rejected is if you apply for more money than you actually need. This is especially true if you are completing a pipe dream application, for an amount of money that your financial documents make clear you really cant afford to pay back on a regular basis.
The best way to assure that the amount you try to borrow is not going to get your loan application rejected is to let that lender determine how much you can afford to borrow and pay back every month.
Rather than finding your dream house and then trying to finance it youd have a better chance of getting your loan application approved if you want to your financial institution, determined with them the maximum you could purchase, get preapproved on that amount and then go find your new home.
If you dont do your homework before you apply for the loan your application could be rejected. Youre going to need many documents, including your investment statements, your pay stubs, your current address as well as past locations, your bank statements and your tax returns.
Dont walk in to the bank ready to fill out a loan application without these papers. Youll be wasting the lenders time and trying his or her patience.
Your inability to understand the jargon of the mortgage loan world will not of itself get your loan application rejected but it wont enable you to adequately understand the process and help yourself negotiate. It will also try the patience of the lender, who could reject the loan application because his time is limited. And, for banks as well as other businesses, time is money.
Jargon isn’t the only thing you should brush up on before you submit your loan application, however. You should understand the process including closing and underwriting.
You must understand the time frame involved in your mortgage commitment, the documents that are going to be needed when and by whom, and the responsibilities for each of the parties involved. Its important that you know to ask for a Good Faith Estimate of your mortgage closing costs so you completely understand all that you are going to have to pay to make the mortgage happen.
Self-employment can be a problem when you submit your loan application. It requires considerably more documentation than that paycheck of your employer. Those who are considered self-employed for purposes of a mortgage loan application are those that are paid only on commission and those that own at least 25 percent of the business.
What you’ll have to show on the loan application if you are self-employed is the tax returns for several past years (if you were self-employed at those times) and solid proof of your fruitful self certification status.