{"id":11004,"date":"2018-08-07T07:54:05","date_gmt":"2018-08-07T13:54:05","guid":{"rendered":"https:\/\/www.virtuance.com\/?p=11004"},"modified":"2018-08-07T07:54:05","modified_gmt":"2018-08-07T13:54:05","slug":"5-reasons-mortgage-applications-reject-pile","status":"publish","type":"post","link":"https:\/\/staging.virtuance.com\/member\/blog\/5-reasons-mortgage-applications-reject-pile\/","title":{"rendered":"5 Mortifying Reasons Mortgage Applications End Up in the ‘Reject’ Pile"},"content":{"rendered":"

By Daniel Bortz | Source Realtor.com<\/a><\/span><\/p>\n

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Picture this nightmare: You apply for a mortgage, but your application gets rejected. Suddenly, you\u2019re hit with an overwhelming wave of embarrassment, shock, and horror. It\u2019s like having your credit card denied at the Shoprite. So. Much.\u00a0Shame<\/em>.<\/p>\n

\"5-reasons-mortgage-application-rejected\"<\/a><\/p>\n

Sadly, this is a reality for some home buyers. According to a recent Federal Reserve study, one out of every eight home loan applications (12%) ends in a rejection.<\/p>\n

There are a number of reasons mortgage applications get denied\u201a and the saddest part is that many could have been avoided quite easily, had only the applicants\u00a0known<\/em>\u00a0certain things were no-nos. So, before you’re the next home buyer who gets burned by sheer ignorance, scan this list, and make sure you aren’t making any of these five grave mistakes, which could land your mortgage application in the “no” pile.<\/p>\n

1. You didn’t use credit cards enough<\/h2>\n

Some people think credit card debt is the kiss of death … but guess what? It’s also a way to establish a credit history that shows you’ve got a solid track record paying off past debts.<\/p>\n

While a poor credit history riddled with late payments can certainly call your application into question, it’s just as bad, and perhaps worse, to have little or no credit history at all.\u00a0Most lenders are reluctant to fork over money to individuals without substantial credit history. It’s as if you’re a ghost: Who’s to say you won’t disappear?<\/p>\n

\"5-reasons-mortgage-application-rejected\"<\/a><\/p>\n

According to a recent report by the Consumer Financial Protection Bureau, roughly 45 million Americans are characterized as “credit invisible\u201d<\/a>\u2014which means they don’t have a credit report on file with the three major credit bureaus (Equifax, Experian, and TransUnion).<\/p>\n

There\u2019s a silver lining, though, for those who don\u2019t have credit established. Some lenders will use alternative data, such as rent payments, cellphone bills, and school tuition, to assess your credit worthiness, says\u00a0Staci Titsworth<\/strong>, a regional manager at PNC Mortgage in Pittsburgh.<\/p>\n

2. You opened new credit cards recently<\/h2>\n

That Macy\u2019s credit card you signed up for last month? Bad idea. New credit card applications can ding your\u00a0credit score<\/a>\u00a0by up to five points, says\u00a0Beverly Harzog<\/strong>, a consumer credit expert and author of \u201cThe Debt Escape Plan.\u201d<\/p>\n

That hit might seem minuscule, but if you\u2019re on the cusp of\u00a0qualifying for a mortgage<\/a>, your new credit card could cause your loan application to be denied by a lender. So, the lesson is simple: Don\u2019t open new credit cards right before you apply for a mortgage\u2014and, even if your lender says things look good, don’t open any new cards or spend oodles of money (on, say, furniture) until\u00a0after<\/em>\u00a0you’ve moved in. After all, lenders can yank your loan up until the last minute if they suspect anything fishy, and hey, better safe than sorry.<\/p>\n

3. You missed a medical bill<\/h2>\n

Credit cards aren’t the only debt that count with a mortgage application\u2014unpaid medical bills matter, too. When you default on medical bills, your doctor\u2019s office or hospital is likely to outsource it to a debt collection agency, says independent credit expert\u00a0John Ulzheimer<\/strong>. The debt collector may then decide to notify the credit bureaus that you\u2019re overdue on your medical payments, which would place a black mark on your credit report. That\u2019s a red flag to mortgage lenders.<\/p>\n

\"5-reasons-mortgage-application-rejected\"<\/a><\/p>\n

If you can pay off your medical debt in full, do it. Can\u2019t foot the bill? Many doctors and hospitals will work with you to create a payment plan, says\u00a0Gerri Detweiler<\/strong>, head of market education at\u00a0Nav.com<\/a>, which helps small-business owners manage their credit. Showing a mortgage lender that you\u2019re working to repay the debt could strengthen your application.<\/p>\n

4. You changed jobs<\/h2>\n

So you changed jobs recently\u2014so what? Problem is, mortgage lenders like to see at least two years of consistent income history when approving a loan. As a result, changing jobs shortly before you\u00a0apply for a mortgage<\/a>\u00a0can hurt your application.<\/p>\n

Of course, you don\u2019t always have control over your employment. For instance, if you were recently laid off by your employer, finding a new job would certainly be more important than buying a house. But if you\u2019re gainfully employed and just considering changing jobs, you\u2019ll want to wait until after you close on a house so that your mortgage gets approved.<\/p>\n

5. You lied on your loan application<\/h2>\n

This one seems painfully obvious, but let’s face it\u2014while it may be tempting to think that lenders don’t know\u00a0everything<\/em>\u00a0about you financially, they really do their homework well! So no matter what, be honest with your lender\u2014or there could be serious repercussions. Exaggerating or lying about your income on a mortgage application, or including any other other untruths, can be a federal offense. It\u2019s called\u00a0mortgage fraud<\/a>, and it\u2019s not something you want on your record.<\/p>\n

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Bottom line? With mortgages, honesty really is the best policy.<\/p>\n

For more smart financial news and advice, head over to\u00a0MarketWatch<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Daniel Bortz | Source Realtor.com   Picture this nightmare: You apply for a mortgage, but your application gets rejected. Suddenly, you\u2019re hit with an overwhelming wave of embarrassment, shock, and horror. It\u2019s like having your credit card denied at the Shoprite. So. Much.\u00a0Shame. Sadly, this is a reality for some home buyers. According to […]<\/p>\n","protected":false},"author":14503,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4,47],"tags":[],"_links":{"self":[{"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/posts\/11004"}],"collection":[{"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/users\/14503"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/comments?post=11004"}],"version-history":[{"count":1,"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/posts\/11004\/revisions"}],"predecessor-version":[{"id":11009,"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/posts\/11004\/revisions\/11009"}],"wp:attachment":[{"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/media?parent=11004"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/categories?post=11004"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.virtuance.com\/member\/wp-json\/wp\/v2\/tags?post=11004"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}