Saturday, August 24, 2013, AM | Leave Comment
You may be all geared up to buy yourself the perfect home and the prettiest home decor to complement it. However, it can pretty appalling to learn that your loan, on which you were solely relying to finance your dreams for a home has been rejected.
There can be several reasons for this and some of the most common reasons have been described below.
All the reasons have a certain amount of logic to them and even though they may seem wrong or unwarranted, they do hold importance.
Gopal Narang has been contributing to the real estate industry for over 22 years now and is very familiar with the various issues that can arise when hunting for your dream property.
A poor credit standing:
The instant your loan is rejected, the first thing that you must look into is your credit score.
There is a high possibility that a low credit score may have led to the rejection of your loan application.
There are some key credit bureaus, which are responsible for keeping a detailed record of your credit score.
To learn more about your credit worthiness, you must get a copy of your credit score. This will help you understand as to where you went wrong.
Sometimes, there is a possibility that the error was from the bureau’s side. However, such occurrences are very rare.
If you know that the issues in the credit report are your fault, you must own up to them. you must then spend a couple of years trying to work up on this issue and straightening up your credit and making it strong so that lenders are willing to lend you money.
Very low income:
Often, you may have the urge to bite off more than you can chew. In such cases, a lender has every right to reject your loan application.
With an insufficient income, there is a high possibility that you may be unable to repay the loan amount that you are seeking.
The first and the most productive way to counter this issue is by looking for a home that you can genuinely afford. This way, you won’t feel the financial pressure as much.
Conversely, if you cannot compromise on the budget of your home, you can get your loan approved by paying a sizable amount of down payment.
Pressure of other debts building up:
Lenders do not prefer a candidate who already has existing debts that need to be paid off.
Therefore, they may refrain from giving you loan for your home.
The best way to make sure you do not fall prey to this is by ensuring that you use up your savings and pay off any existing debt that can be held against you when it comes to applying for a home loan.
Providing incorrect information:
If you have provided information that is wrong and if the lender finds out about these inconsistencies, there is a high possibility that your request for loan can get rejected.
The information on your income is often cross checked with your employer.
Therefore, it is wise to give out the right information with the correct and precise details when applying for the loan.
Loans of many kinds depend a lot on your employment and employment records. Your loan application for buying this dream property may get rejected if you have lost your job during the process of loan application.
As a rule of thumb, you must hold on to your job for at least 2 years before applying for a loan.
Eve Rose works in the real estate industry and has a professional background in finance. She has also worked with a company allied with the Gopal Narang team for a very brief period. She is a freelance photographer and loves her digital SLR camera.