5 Reasons your Self Employed Mortgage was Denied

Mortgage Tips 21 May

Self-employed mortgages are obtained by people who have businesses of their own. This type of mortgage is already tough to obtain the income may not be what a normal employee may be able to guarantee. There may have been cases where your self-employed mortgage claim may have been denied. Here are the top five reasons this could have happened.

  1. Your income on paper isn’t attractive.
    Many self-employed individuals tend to present lower figures of income that they originally receive for tax reasons. But this makes you eligible for lower self-employed mortgage plans than you are actually allowed to receive. This can be avoided by planning your mortgage and presenting an increased amount in the two years prior to the claim.
  2. Credit scores are important but so are debt ratios.
    Every broker will tell you that you need a good credit score. While that is true, concentrating on your debt should also be a priority. Self-employed mortgages can be obtained easily if the lenders feel you can pay off your debts. However good your credit score, if you have too much debt when compared to your monthly income, you may have high chances of being rejected for the self-employed mortgage.
  3. Minimum or no credit history.
    Paying for things in cash may seem like a good option at the time but it contributes to you having little to no credit history. Lenders and banks require credit history as proof that you can pay off your debt. They see this as a proof that you will be able to handle and repay your self-employed mortgage. Having no credit history will not make you seem reliable. Hence it is important to maintain a good credit history to maintain a good credit score.
  4. You don’t have proof of income to support your claims.
    As a self-employed individual, you may have had the capacity to be paid in cash and would have shown fewer figures on your income tax forms. While this is beneficial to you, the case is opposite when it comes to claiming a mortgage. You need to have reliable proof of income to support your claim.
  5. Didn’t seek a broker.
    It may seem like a trivial concern but actually having a professional on your side can help you secure your mortgage with ease and speed.

5 Reasons you need to get pre-approved for a First Time Home Buyer Mortgage

First Time Home Buyer 15 May

First time home buyer mortgages can be a confusing task. Searching for houses and finding out that your finances don’t cover it can be a bitter shock in the pleasant process of searching a home for you and your family.  

  1. You can have a clear idea of what you can afford.
    You must have heard a lot of people tell stories if they had found the perfect home but they had to give it up because they found themselves without financing at the point of purchase. Having a clear idea of what you can and cannot afford is very essential. By getting pre-approved for a first time home buyer mortgage, you can get an idea of what your budget is. It can also help you determine your first time home buyer mortgage limit.
  2. Pre-qualifications are just not enough.
    First time home buyer mortgage lenders can provide you with a certain rate for your loan. This is a pre-qualification. In this process, the lender does not check your credit score and hence you don’t know if you qualify for the mentioned deal. Getting pre-approved means that you are guaranteed the mentioned rate for your first time home buyer mortgage. This allows you to bid with confidence.
  3. It can give you leverage in a bidding war!
    Having an approval letter for your first time home buyer mortgage allows you to have leverage over competitors and bidders who do not have the pre-approval. The pre-approval letter goes to show that you are capable of paying the amount required for the home and makes you look serious about your offer.
  4. You can conduct a focused search.
    When you are pre-approved, you can search a home based on what you can afford. The realtor you work with will have a guarantee that you are serious and the deal isn’t a waste of his time. He will work extra hard and with a better idea of what you need to fulfill your requirements.
  5. Sellers are ready to negotiate with pre-approved buyers.
    You can get multiple benefits such as lowered costs, added appliances and more when compared to non pre-approved buyers.