Getting a home loan is part of buying a property. Not everyone is capable enough to afford their own house. A home loan allows an individual to enjoy the property that their buying while paying for it in a considerable amount of time that fits his or her finances.
But believe it or not, home loan rejection really happens. Banks and money lenders are cunning when it comes to granting people money. They want to be assured that they are not risking losing money when they approve your application. That’s why the application is tedious and stressful. Some can happily go home to their brand new house, but some are unfortunate enough.
But why do people get home loan rejected? Reasons behind home loan rejection comes from discrepancies with your application. Here are some examples of why you probably got (or will) rejected from your home loan application:
1. Credit score
This is the first thing that your money lender will see upon your application: the credit score. Low credit score reflects your inability to be irresponsible with your money.
2. Previous jobs
Another factor is your employment history or how you fared with your jobs in the previous years. Stability is one of the things that banks look for. They want to see that you have a stable job and a constant source of money.
3. Other debts
Creditors and lenders will ask if you have any previous debts or loans and how you manage to pay. If you still have an ongoing loan, they will have to compute if your current income can handle that loan and a future home loan.
4. Credit history
Your credit history reflects your spending habits. How often do you use your credit card? How do you pay for them? Do you pay on time or too late? Do you pay for the exact amount? All of these will be analyzed for sure.
5. The property
Some properties are just too much for your income, that the banks and lenders fear that you won’t be able to pay for it. Maybe try looking for something cheaper and appropriate for your finances?
6. Lack of financial stability
Probably the main reason why one is denied of home is their lack of economic stability. A stable job and a steady source of income that won’t go nowhere will make the bank feel safe. Remember that banks get their money from the interest coming from your loan. If you won’t be able to pay them due to lack of stability then it’s going to be their loss.
If you did get rejected for a home loan, then don’t worry. There are still ways that can help you get your dream home. Below are some of them:
- ASK WHY YOU GOT DENIED
Find out why you got denied. By finding out how you got rejected, you’ll be able to know how you can fix the problems and find solutions from them. Call your bank or lender and ask if you can do anything to solve it.
- EDIT, EDIT, EDIT
If the problem is from your poor application forms and such, then ask the lender to give it back to your for some checking and editing. There might have been some error that the lender definitely oversaw.
- CLEAN UP YOUR FINANCES
If the error is not on your application but simply on your credit history, then it’s probably time to do some clean up with your finances. Save up to get enough down payment, start paying your debt, or be responsible on how you use your credit card.
- FIND CHEAPER PROPERTY
Again, your property will also affect your loan application. If that three bedroom mansion in Forbes is simply too much, then perhaps looking for other cheaper properties is for the best.
- GET A CO-SIGNER
To make your appeal stronger ask for co-borrower. This co-borrower or co-signer can be your partner or family member. Choose a co-borrower that has strong credit history to make your appeal better.
- TRY TO OTHER BANKS
If all else fails, move on and apply to another bank or lender. Remember that banks and lenders have their own ways of looking for those who they will grant loan. You might just hit the jackpot in another bank.
The only way to have a successful home loan is to brush up on your finances. Before applying, make sure that everything is clear and that whatever you pass will reflect on what your finances are truly are.