Reasons Loan Applications Are Rejected - 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.Failure to accuratly provide employment and mortgage history will often result in a rejection of your loan application.
Judgements and liens are often causes of loan rejection.
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 informaiton and documentation. If you do not provide this information in a timely manner it may result in your approval being rejected.
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 definately will. Many times the lender will do a verbal verification of employment the day of, or day before, your anticipated closing.
