Owning a home with a white picket fence is part of every American dream. And if you are like most of us, you’ll probably need a home loan to make your dream your reality. And before going through all the hustle of applying for a mortgage, finding your dream home, and seeing it slip out your hands.
Gathering and straightening out all the documents is a headache, and a little mistake can make getting your home loan approved much harder. But as per The Time Money Mentor, your spending habits also play a bigger role in getting your home loan approved or rejected as well.
Getting your first mortgage is more than credit scores and income. Below are some factors that can surprisingly blindside you.
Large Cash Deposits
Recurring, notable amount of cash deposits without proper documentation and verified sources can raise concerns from the mortgage lenders about money laundering and such. It can be a tight spot for you. Be prepared to explain it.
Online Presence
While rare occurrences, a negative internet public persona could lead to further investigation and potential delays. Make sure you have good and true reasons to explain your side.
Subscription Overload
If you have a high volume of monthly subscriptions, that might make you paint as someone with an expensive lifestyle, impacting your perceived ability to handle mortgage payments. It is always a good practice to reduce and keep only the important ones.
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New Debt / Large Purchases
Avoid taking on new debt or making any impressive purchases during the approval procedure, as this can have a negative effect on your debt-to-income ratio and likely reduce your chances of getting your first mortgage.
Inconsistent Employment History
Having an irregular employment history or if you’ve changed jobs can make you seem like a risky borrower to the mortgage lenders. Ideally, lenders like to see someone with a 2-year history of employment in your current role, but if you are being promoted or taking a new position, you can get approved. To avoid this kind of situation, always have a letter of intent/promotion from your new/old employer handy.
Wrapping Up
Making a note of these usually overlooked factors can empower you for your first home loan application, making it a smooth sail for you. The mortgage process will be more effective, and you’ll end up avoiding so many complications.
FAQs
What are the main factors to get a mortgage?
Being eligible for a mortgage is complex and can depend on a number of factors. But the mains are – size of your deposit, your credit score, income, and monthly expenditure.
Does investing have anything to do with mortgage rejection?
Some mortgage lenders have a policy to seek bank statements or accounts. If investment money is your sole income, you may need evidence from the investment Fund Managers. There is no way around the affordability criteria.
What are the factors that can affect the amount I can borrow against my mortgage?
There can be a few like – outgoing money, such as expenses, credit card bills, insurance, bills, or loan repayments. Living and earning situation – self-employment or maternity leaves, or not having a regular income. Mortgage term – what time duration you want to follow to pay your mortgage. Property value – how much the property is worth, and its location.
