Credit score

There are a few reasons why you might not have gotten approved for you mortgage loan. There are also a few things that you might be able to do that will help you get approved next time. The bank considers many different things when approving or disapproving a mortgage loan.

Is My Credit Score The Reason Why I Didn't Get Approved For My Mortgage Loan?

Author: Chris Bell

There are a few reasons why you might not have gotten approved for you mortgage loan. There are also a few things that you might be able to do that will help you get approved next time. The bank considers many different things when approving or disapproving a mortgage loan. Yes, banks are very large corporations, but they also want to make sure they’re leaving their money in good hands. A bank is a business created to make money and they make money on interest. Therefore, if people like you and me don’t pay them back, or get stuck in a foreclosure, then the bank looses money.

Here are some reasons why you may not have been approved for your mortgage loan.

1. You http://www.thefreemortgagecalculator.com/Credit_Score.html”">Credit Score came back to low. You should want your credit score in the range of 650-800. A credit score of 650 is still a little low and you’d like it to be over 700 for a no hassle loan approval, but we aren’t all perfect and the bank knows that. In order to raise your credit score you need to keep paying everything on time. It has to be built over time by getting credit cards and always paying them on time, or auto loans, college loans etc.

2. Too low of a debt to income ratio. The bank will check your debt to income ratio and it needs to be below 35-40%. That means your monthly bills can only be 35% of your monthly gross income. That 35% includes the new mortgage or loan you’re looking to acquire.

3. Your borrowing power may have been too low. The bank determines your borrowing power based on your debt to income ratio. If you can afford $1,500 per month and you’re asking to be approved for $200,000, then your monthly payment, including taxes and insurance, will be much higher than $1,500 per month. I suggest using a mortgage calculator to figure out how much your http://www.thefreemortgagecalculator.com/Monthly_Mortgage_Payment.html”">Monthly Payment will be based on your debt to income ratio.

4. You down payment, or amount you have in the bank may be too low. Like I said before, the bank is in business to make money. In this economy, would you loan someone $200,000 to buy a home with only $5,000 for a down payment and nothing else in the bank? Probably not. Why? Because if they don’t pay their mortgage payment then you might have to foreclose on them (kick them out and sell the home to get your money back). Then, even if you sell the home for $200,000 you need to pay 5% in real estate commission which is $10,000. So you lost $5,000 on that deal, and that’s assuming you can get the $200,000 in this economy!

Those are a few of the basic reasons a bank might not approve your http://www.thefreemortgagecalculator.com/index.html”">Mortgage Loan. The banks make a lot of money on the people who stay in their home for years and pay on time every month. However, like credit card companies, banks have very tough times and need people to pay every month on time. Keep improving that credit score, paying those bills on time and saving money to get a bigger down payment so that you can get a step closer to buying a home.

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This article is brought to you by www.thefreemortgagecalculator.com. I teach you about your http://www.thefreemortgagecalculator.com/Credit_Score.html”">Credit Score and how to improve your http://www.thefreemortgagecalculator.com/mortgage_borrowing_power.html”">Borrowing Power. You will also need to figure out your http://www.thefreemortgagecalculator.com/Debt_Income_Ratio.html”">Debt To Income Ratio. Both are very important to know when buying a home.

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