Not realizing you are self-employed. First-time buyers who are self-employed (which can include working at home, being paid by commission only, or owning 25 percent or more of a business) often need to show tax returns as a proof of income. Communicate your employment status before the loan hits the underwriting process and avoid snags later.To prevent seeing your loan application rejected, please be sure to review your credit report with one of our senior mortgage counselors to identify any potential late's or other delinquencies on your credit report which might result in a rejected loan application.
Failure to accurately provide employment and mortgage history will often result in a rejection of your loan application.
Judgments and liens are often causes of loan rejection.
Often an application is rejected because it was not completed accurately. Make sure its filled out completely and accurately.
Debt to Income Ratios exceeds the lenders guidelines.
Large purchases such as automobiles made after loan application.
In most cases you are required to maintain your current credit status. In the event that your credit scores drop, which can happen from taking on additional debts, your loan may be rejected at the last minute. It is common for lenders to re-check credit the week of closing.
Untimely responses by the borrower. Loan approvals are subject to additional conditions. These conditions often require that the broker contact the borrower to obtain additional information and documentation. If you do not provide this information in a timely manner it may result in your approval being rejected.
Loan applications can be declined because of the subject property. If the property being used as collateral is appraised at too low a value, or if the property is a non-warrantable condominium or cooperative unit, that is, a unit located in project not approved with Fannie Mae/Freddie Mac.
Be sure to maintain your current job status while applying for a loan. A raise or promotion at your current job will not hurt you, but being fired or quitting definitely will. Many times the lender will do a verbal verification of employment the day of, or day before, your anticipated closing.
Loan applications are declined because of inaccurately disclosing information on your loan application. You must always be truthful when completing your loan application.
If you are a 1099 employee you are considered self employed. If you do not have a 2 year history the lender may turn you down for your loan because of this.
Continuous employment in the same line of work for 2 years is a necessity. You may be denied if you do not have this.
Keep from moving funds around in your bank accounts or loaning large sums of money to a family member just before closing. Many lenders require proof the funds for closing are coming from your bank account.
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