With housing prices low and inventory huge, home loans should be closing like crazy. However, loan officers are reporting that this is not the case. In fact, they say that home loans are becoming more difficult to close.
These days, it seems it is a lot easier to get bad credit auto financing than a mortgage.
Experts mention several top reasons that people cannot get a mortgage loan. Bad credit is probably the most popular, making it important for homebuyers to be aware of their credit history and scores. A score of 640 is needed to qualify for most government loans and only a score of 700 or higher will usually open the door to a conventional loan.
Consumers should have at least three trade lines of credit, pay off balances each month, and not have accounts in collections.
Being a first-time homebuyer is a negative when it comes to buying a home because there is no history of mortgage payment. Not having the money required for a down payment can also prevent someone from qualifying for a mortgage.
A loan from the Federal Housing Administration requires a down payment of at least 3.5 percent. For a conventional purchase, this increases to between ten and 20 percent.
Employment history should include a 24-month period of work within the same field. Monthly gross income should be large enough to cover the mortgage, homeowner insurance, and property taxes in addition to debt from auto payments and credit cards.
A monthly debt-to-income ratio of 45 percent or less is recommended.
Home value is important whether buying a house or attempting to refinance. If the value of the home is questionable, there could be issues with the mortgage. If the home appraiser reports declining market for the property, a lender could deny the loan even with a great credit score and a 25 percent down payment.
