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Only 6 Out of 10 Qualifies for a Mortgage: Find out Why

Have you ever heard how low the rates have been and you are encouraged to apply for a mortgage but then you don’t qualify? This is unavoidable for some. A reality going on is that only 6 out of 10 that apply for loan are qualified. 4 out of 10 cannot qualify for different reasons, reasons that they didn’t even know would lead to their application’s disapproval.

There are 3 major aspects that are reviewed during an application. And within those 4 major factors lie the reasons for disapproval.

Here are the factors and the reason why one is rejected:

Credit

So, what is credit? It is basically the agreement we make whenever we borrow of some value and agreed to pay on a later date. But then, for mortgage, this is a very important factor. Most lender pull out your credit report and review it if you could actually qualify for a mortgage. So the reasons why one’s application is rejected as the credit is reviewed are:

  • Your credit score is too low

What is a credit score that is too low? Too low credit score is a credit score under 620. The typical score most lenders accept is 640, some may go until 620 but only few lenders agree to that score. Way under that is not acceptable. So, if you are thinking of applying, improve your credit score first.

  • Reached the Maximum Credit Limit

This means your balance has actually reached more than 30% of the allowable amount. The best thing to do about this is to increase the balance by paying something off.

  • Numerous Credit Inquiries

This could actually lower down your credit score in some way, so during your application it would be good to keep from pulling out your credit history. A mortgage related check for your credit history isn’t going to affect your score, aside from that, the effect is very visible.

Debt

Debt is the amount that is owed to a person, a company or organization. So how debt affects the application? This actually reflects you’re over all capacity to pay your debts. Here are the reasons for rejection concerning your debts:

  • Paid-in-full debt that is not accounted

There are debts that you must have paid fully; however, there are times that your credit doesn’t support such. So no matter if you already have zeroed it, it will still be accounted. So, if ever you have zeroed a huge debt in advance and your credit won’t support such, chances are, you can get rejected as the debt is still accounted for.

  • Failed Co-signer Obligations

Have you lent your score to someone? This could actually be a problem in your application, if ever the person isn’t paying his mortgage anymore; your score would definitely suffer.

Income

  • Not Enough Income

Are you self employed and your schedule C is showing insufficient income to qualify you? This is also one of the major problems most self-employed encounters. The best way to get through this is to limit the expenses you declare to increase your income. Mostly, self employed maximize their expenses as they declare on their tax to minimize the tax they would be paying.

You can actually have a professional help you with all these before you could apply. To avoid further hassles and delays, it is good to put everything in order before your application.

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Brian Moynihan Working His Magic for Bank of America’s come back in The Mortgage Scene

Brian Thomas Moynihan, Bank of America’s CEO has faced another trial in his abilities as a cross cutter and problem fixer and yet managed to prove his undeniable skills. On Thursday, the bank has stated an increasing volume on mortgage lending and a decrease in the expenses. This is an intermediate sign that the bank has indeed moved past the effects of purchasing Countrywide Financial.

The results for the fourth quarter earnings of the bank have highlighted the extreme scale of the problems that remains. There was a deflation in the total profit of the bank that goes about 25 percent due to a decreasing number of client banking and other charges that the bank settled. What the bank have discovered is the way to get out of the quick sand of troublesome home loans. What it needs to discover is how to grow after all.

mortgageThe challenge now is how to boost the profit, which would be quite hard as lending margins are still very narrow with capitalization issues that might hinder high profit gains in most banks.

It was said that Moynihan have a minimal experience only when it comes to increasing gains. He may have made his way to be known as a problem solver in the past as he fixed few branches of Bank of America, however, this is considered as a very different challenge with a higher difficulty rate.

Moynihan is exerting effort to slowly resolve this issue as he laid out plans together with Financial Officer Bruce Thompson aiming to gain new business which includes their plans to hire mortgage loan officers.

Profit may have deflated in the fourth quarter for consumer banking but the bank has managed to get an increase in the global banking and other fields.

Moynihan have expressed its drive to keep on with his strategies and strengthen the company’s earnings. He still has time and the investors support beside him.

It was also revealed by one of the executives working with Moynihan that his plans focuses on cleaning up the mess from the past, cutting the expenses while patching up lost capital.

Now, they are surely back in their feet and would be able to continue reclaiming their lost glory as the number one mortgage lender in the entire nation

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