Reasons Your Mortgage Application Could Get Rejected

by Ann Hayward 07/21/2019

A wise man once said to hope for the best, but plan for the worst. When you’re contemplating buying a house, even before beginning the actual application itself, it’s helpful to consider what could possibly lead to its rejection. This is especially important if you’ll be applying for your home loan at a traditional bank. These are particularly finicky with whom they give house loans after the 2008 financial crisis. So, here are a few pitfalls you need to sidestep when filling in your application forms.

Sketchy job history

In order to be sure you’ll be able to pay them their money back, lenders like to get a picture of a steady flow of income in the near future from applicants. You won’t help this cause if your job history reads like a game of musical chairs. Or if there are gaps in your recent past where you had no source of income. Mortgage officers like to see some sort of stability in the income streams of applicants. If they don’t get that impression, your pre-approval might not see the light of day.

In that vein, be sure to document your income streams and assets well in anticipation of the day you will be making that application. This preparation could be the difference between approval and rejection.

Low credit score

A low credit score can be as a result of unpaid debt or debts that you eventually paid up but didn’t update on your FICO records. Either way, if your score is lower than 620, lenders will consider approving your mortgage a risky investment. A low credit score should not, however, spell death to your dreams of owning a home. Get your credit score from one of the many available online sources and see how you can improve it. After a couple of months, you will find yourself eligible for that mortgage.

Outstanding tax liens

An unpaid tax lien or judgment from the past that you may have forgotten about may negatively affect your application. It may not be a problem in the initial stages, but at the point when your lender does a title search for the property, unpaid federal or state tax liens will surface. A clear title policy cannot be issued with outstanding tax liens or judgments.

Find out your FICO score for free online and talk to your lender to determine the best course of action for you.

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About the Author

Ann Hayward

Born in Philadelphia and raised in the suburbs, Ann Hayward got her Pennsylvania real estate license at age 18 even before going to college. This second-generation real estate professional followed in the footsteps of her father and two uncles, inheriting their passion for the business. Licensed in DC, Maryland and Virginia, Ann is accomplished in her career, with numerous designations including SFR, SRES, PSA, WHC, and multiunit Housing Development Finance Professional (HDFP) from the National Development Council. She specializes in Prince Georges and Montgomery Counties, Northern Virginia and Washington, DC, all jurisdictions where Ann has lived and knows very well. In addition to her professional expertise, she owns and manages personal investment property, understands and has been involved in the renovation/remodeling process, and has great resources which she shares with clients. When you hire Ann to represent you, she will make your buying or selling experience an enjoyable, rewarding one. Her compassion, sensitivity to her clients’ needs, eye for detail, and ability to see the big picture when guiding you through a purchase or sale are unique assets that will ensure your success. A diverse and relevant background also gives Ann a distinct edge. For 30 years, she worked in fast-paced, high-pressure television and theatrical production, attaining the highest achievement – DGA membership as a Director, and as an award-winning staff and freelance writer. Her keen audio visual skills and design sense benefit sellers in marketing their properties, and are invaluable in helping buyers see the potential of space. A true renaissance woman, Ann was also an income tax professional and office manager for H&R Block, so she thoroughly understands the tax and financial implications of acquiring and selling real estate. Her superior organizational skills are further evidenced as owner of a downsizing/professional organizing business, Managed For You, which allows her to connect with everyone from millennials to boomers and seniors, whether for small space planning or assisting with major decluttering and transitioning. Ann holds an AB in American History from Simmons College, Boston, plus attended Robert Wagner Graduate School of Public Administration where she was a candidate for Doctorate. She additionally studied Film Direction at the American Film Institute in LA, and was a Stanford University post-graduate Professional Journalism Fellow. Personally, Ann is an avid if not very good golfer, and the co-founder of a nonprofit 501c3 organization offering educational guidance, tutoring and counseling for youngsters from elementary school through college admission. She sits on the board of trustees of a nonprofit educational film production corporation as well. (202) 494-6252 [email protected]