Why Knoxville First Time Buyers Get Denied For A Mortgage
Applying for a mortgage can be a daunting process for Knoxville first time home buyers. Even after you are pre-approved, it is still possible that your mortgage can be denied in the end. For many buyers, the process of waiting for mortgage approval and closing can be a nerve-wracking time
If you’re nervous about applying for a mortgage, here are some of the reasons why Knoxville first time buyers get denied for a mortgage.
Credit issues are one of the most common reasons first time home buyers struggle to get approved for a mortgage.
A low credit score can make you seem like a risky option to a lender. Late or missed payments can do damage to your credit score as well as having a lot of debt. If a lender sees a lot of this on your credit report, they may worry about lending you money.
In addition, if you have no credit, you may also struggle to get approved for a mortgage. You may have a great income and pay your bills on time, but if you have no credit, you have not way of showing this. It’s important to establish credit early on to show a lender that you have strong payment history.
The Fix: If you’re not sure where your credit score is or don’t have any credit, there is no harm in talking with a loan officer prior to thinking about buying your first Knoxville home. A loan officer can give you an idea of what needs to be done in order for you to be approved for a loan.
You can have a decent credit score and income, but if you have a lot of debt, you could struggle to get approved for a mortgage.
When you apply for a mortgage, your lender will look and your income and debt to determine your debt-to-income ratio. Based on that, they will figure out if a buyer can afford a mortgage payment and how much that mortgage payment would allow them to afford.
Unfortunately, if you’ve financially stretched yourself with credit card debt and a high car payment, you may find you cannot afford the house you though your could afford or that you cannot afford a house at all. Keep in mind, different loan programs have different debt allowances for what they will allow. Talk with a loan officer to see what options you may have.
The Fix: Again, talking with a loan officer early on will let you know where they stand with the whole process. You may need to pay down some of your debt in order to get approved for a loan, but it’s better to know sooner rather than later.
Income can be a tricky thing when it comes to getting approved for a mortgage. If you’re self-employed or make commission, you may have a tougher time getting approved for a mortgage.
The general rule is that you’ll want to show two years worth of income, particularly if you’re self-employed or commission based. In addition, if you write off a lot of expenses when you do your taxes because you’re self-employed, that can also hurt what can be counted as income when it comes to applying for a loan.What you count as income, may not be considered as “qualifying” income to a loan officer.
The Fix: Talk with a loan officer to see how much home you can afford. If you’re struggling to come up with enough income, see if your loan officer has any suggestions.
Bottom Line – Start Early
If you have concerns over getting approved for a mortgage, the only way you will know if you have options is by talking with a loan officer. You will either find you will qualify for a mortgage or that you may have some work to do prior to getting approved for a mortgage. Knowledge is a very powerful thing. If you’re serious about buying a home, the first step is talking with a loan officer.
Are you thinking about buying your first Knoxville home for sale this year? If so, do not hesitate to give Knoxville Home Team a call today. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.com. Kati can be reached at 865-696-1888 or via email at Kati@KnoxvilleHomeTeam.com. We’ve helped countless first time buyers find the perfect home for them and we’d love to help you do the same!