| There are a few reasons why you might not have | | | | bank determines your borrowing power based on your |
| gotten approved for you mortgage loan. There are | | | | debt to income ratio. If you can afford $1,500 per |
| also a few things that you might be able to do that will | | | | month and you’re asking to be approved for |
| help you get approved next time. The bank considers | | | | $200,000, then your monthly payment, including taxes |
| many different things when approving or disapproving | | | | and insurance, will be much higher than $1,500 per |
| a mortgage loan. Yes, banks are very large | | | | month. I suggest using a mortgage calculator to figure |
| corporations, but they also want to make sure | | | | out how much your Monthly Payment will be based on |
| they’re leaving their money in good hands. A bank | | | | your debt to income ratio. |
| is a business created to make money and they make | | | | 4. You down payment, or amount you have in the |
| money on interest. Therefore, if people like you and | | | | bank may be too low. Like I said before, the bank is in |
| me don’t pay them back, or get stuck in a | | | | business to make money. In this economy, would you |
| foreclosure, then the bank looses money. | | | | loan someone $200,000 to buy a home with only |
| Here are some reasons why you may not have been | | | | $5,000 for a down payment and nothing else in the |
| approved for your mortgage loan. | | | | bank? Probably not. Why? Because if they don’t |
| 1. You Credit Score came back to low. You should | | | | pay their mortgage payment then you might have to |
| want your credit score in the range of 650-800. A | | | | foreclose on them (kick them out and sell the home to |
| credit score of 650 is still a little low and you’d like it | | | | get your money back). Then, even if you sell the home |
| to be over 700 for a no hassle loan approval, but we | | | | for $200,000 you need to pay 5% in real estate |
| aren’t all perfect and the bank knows that. In order | | | | commission which is $10,000. So you lost $5,000 on |
| to raise your credit score you need to keep paying | | | | that deal, and that’s assuming you can get the |
| everything on time. It has to be built over time by | | | | $200,000 in this economy! |
| getting credit cards and always paying them on time, | | | | Those are a few of the basic reasons a bank might |
| or auto loans, college loans etc. | | | | not approve your Mortgage Loan. The banks make a |
| 2. Too low of a debt to income ratio. The bank will | | | | lot of money on the people who stay in their home for |
| check your debt to income ratio and it needs to be | | | | years and pay on time every month. However, like |
| below 35-40%. That means your monthly bills can only | | | | credit card companies, banks have very tough times |
| be 35% of your monthly gross income. That 35% | | | | and need people to pay every month on time. Keep |
| includes the new mortgage or loan you’re looking | | | | improving that credit score, paying those bills on time |
| to acquire. | | | | and saving money to get a bigger down payment so |
| 3. Your borrowing power may have been too low. The | | | | that you can get a step closer to buying a home. |