Wednesday, August 8, 2018

4 Reasons North Shore Lenders Will Reject Your Mortgage Application

When you've found your dream home on Chicago's North Shore, the next step is meeting with your local lender to submit a mortgage application. Pending you've already been pre-approved, this next milestone in the homebuying process should be smooth sailing, but there are a few factors that can send you right to the rejection pile.

Below are four reasons why a North Shore lender might reject your mortgage application this year:

You've changed jobs
Lenders like to see two solid years of consistent employment before they will agree to approve a mortgage loan. And while you may not always be in charge of a career move—for instance, if you are laid off—it is best to wait until after your closing to change if you can.

You don't have enough credit
You may think credit cards are a no-go when it's time to buy a home and you are right— somewhat. Your credit score and history are major factors lenders will observe in their decision process, but a lack of credit can be just as troubling as poor credit. If you have yet to build a credit history, it is fine to carry some debt via credit cards, as long as you pay it off on time.

You have poor credit
Lenders will look at your credit score to confirm you are capable of managing debt and paying on time. However, if your credit score is low, not only will you not qualify for favorable loan programs with reasonable rates, you could risk being rejected altogether. Take the time to look into your credit score and clean it up before applying for a loan, if possible.

You opened a new line of credit
Just as I mentioned above, it's important to have credit established, but you'll want to avoid opening anything new while you're in the process of buying a home. This is a red flag to lenders who will want to see that you are responsible with your debt management and opening a new line of credit will both ding your credit and suggest that you might be more of a spender.

Ready to begin searching for your dream home in Winnetka, Highland Park, Deerfield, Glencoe, or Northbrook? Contact me today!

Janie Bress
Your North Shore Real Estate Expert

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