There
are many reasons why a mortgage loan for your Charleston real estate could be
declined. It doesn’t have to be the end
of your real estate dreams. Here are a
few things to consider if you’ve been turned down for a mortgage:
Loan-To-Value Ratio
The loan-to-value
ratio (LTV ) is the percentage of
the appraised value of the Charleston real estate that you are trying to
finance. For example, if you are trying
to finance a home that costs $100,000, and want to borrow $75,000, your LTV is seventy-five percent.
Lenders
don’t like a high LTV . The higher the ratio, the harder it is to
qualify for a mortgage. To reduce the
percentage, you can save up a bigger down payment. Some lenders may approve the loan if you buy mortgage insurance,
which protects the lender in the case of default, but makes your mortgage
payment higher.
Credit To Deb t
Ratio
Lenders
will be less likely to approve your mortgage loan if you have a high credit to
debt ratio. The ratio is figured by
dividing the amount of credit available to you, on a credit card or auto loan,
and dividing it by how much you are currently using.
High
debt loads will scare away most lenders.
Try to keep your debt to under fifty percent of what is available to
you. Lenders will appreciate it, and you
will be more likely to be approved for a mortgage.
No Credit Or Bad Credit
Few things
can derail your mortgage loan approval like credit issues. Having no credit record can be as bad for
your approval chances as bad credit.
With no record of timely loan payments from anywhere, a lender is unable
to determine your likelihood to repay the mortgage. Some lenders will consider other records of
payment, like utility bills and rent reports from your landlord.
If you
have frequent late charges or collections, you’ll need to work on getting those
paid on time, every time. There aren’t
many lenders who’ll approve someone with bad credit, especially in today's
market.
Talk to
your loan office to determine which problem applies to you, and learn the steps
to fix it. Then, you can finance the Charlestonreal estate of your dreams.
Interested in selling your Charleston area home? Visit: www.jeffcookrealestate.com
Interested in buying a Charleston area home? Visit: www.discovercharlestonareahomes.com
-Jeff Cook
Jeff Cook
Real Estate
Charleston,
SC
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