Denied a mortgage? Maybe here’s why

The New York Times’ Vickie Elmer addresses reasons for mortgage loan application rejection.

“WE regret to inform you...” Nobody applying for a new mortgage or a refinancing wants to see or hear these words. But last year more than two million people were turned down for home loans, according to federal data, often because they didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. Lenders’ underwriting criteria have become more rigorous in recent years; some banks have tightened up beyond federal requirements.

Here are the six biggest triggers for rejection, according to industry experts.

• INSUFFICIENT INCOME Lenders want to make sure you can afford to make the mortgage payments. Someone who earns, say, $40,000 a year need not bid on a $750,000 apartment, unless there’s a trust fund with quarterly payouts or other money available. Also, lenders typically look for at least a two-year track record of income, which could hurt those who may have switched jobs recently.
• CLOUDY FINANCIAL PICTURE. Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of your adjusted gross monthly income. Borrowers may be surprised at what counts and what doesn’t.
• BAD CREDIT Lenders typically reject applicants with a FICO score below 620. Failing to pay your mortgage on time affects your score.
• LOW APPRAISAL. This is the predominant reason people are denied home loans today, according to industry experts.
• PROPERTY PROBLEMS. Issues within an apartment unit or a house such as major repairs have to be addressed. In our area of NJ, there are several condominiums with lawsuits pending against them that have turned into deal killers.
• INFORMATION MIX-UPS. About 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

Read the full article.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Why's my FICO score dropping? Here’s an answer

The New York Times’ Lynnley Browning writes,

“IF you’re looking to refinance or buy a home, potential lenders and mortgage brokers will be checking your credit scores. And if those scores are being verified, chances are they are going down.

“Yes, you read that correctly. Each time a credit score is pulled from one of the three credit bureaus as part of a loan application, it can decline by as much as 20 points, or more. Call it the Great Credit-Score Ding.”

While information about credit scores and their use is becoming more widespread, “few buyers know this goes on — or what to do about it.”

“Most consumers are unaware that this happens,” said Paul Stephens, the director of policy and advocacy for Privacy Rights Clearinghouse, a consumer advocacy group in San Diego.

The so-called FICO score is sold to the three credit bureaus — Equifax, Experian and TransUnion — “which each then use different formulas to compute a consumer’s creditworthiness.”

The higher your credit score, the lower your interest rate. So why does your score get affected by credit report inquiries?

“It is the “hard pull” inquiry — in which lenders and brokers learn that you are in need of money, and check your credit in order to process your application — that can most damage your score.”

This can result in a 20 point or more drop in your score each time you authorize a lender to check your credit.

“So how can borrowers minimize the blow, especially those shopping for the best mortgage rates and working with more than one lender or broker?”

“If all the requests are made within a short time, they usually will count as only one check.”

There is some good news, “borrowers who check their own credit scores through a less invasive “soft pull,” to get an estimate of creditworthiness and of loan rates, do not see their scores go down.” So, ask your lender to do “a soft pull before deciding which loan to go with, at which point a formal inquiry is made.”

Read the full column, Preventing Credit Score Dings

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com