Applying and getting approved for a mortgage brings you one step closer to getting your dream home. If you have a large down payment ready or have excellent credit and income, you should be approved without a hitch. But unfortunately, it doesn’t always go smoothly. It’s part of the reason why mortgage denial can be such an unfortunate setback to experience.

The good news is that mortgage denial doesn’t have to end your chances of buying a home. If you are prepared and know exactly why you were denied and understand what to do next, you can still find a great home.

Common Reasons Behind a Mortgage Denial

Here are some of the most common reasons why your mortgage application was denied in the past:

1. Unstable Income. Stable income is extremely important for a mortgage application, yet many applicants tend to rely on their credit score for approval instead of their actual income. If you have an unstable income, it will make it difficult to get approved for a mortgage. After all, lenders need proof that you have a reliable source of income. Even with existing income that fluctuates during the year, a lender will have to decide if it is worth the risk of loaning you money. Try to increase what you earn and get a steady source of income.
2. Overwhelming Debt. Having debt on your credit report is not a good thing. It makes it appear as if you are not responsible for your finances and are not able to pay back your debts. Many lenders will automatically reject applications due to potential financial irresponsibility. To avoid running into this problem, try to keep your credit card balances low and pay off your debt as soon as possible. Having a cleaner record ensures that your debt is low or ideally non-existent, indicating good financial capabilities.
3. Low Credit Score. A low credit score is another reason for mortgage denial. If your credit score is below 620, you may have a hard time getting qualified for a mortgage. Even if you don’t currently have any debt, a lower-than-average score can still hurt your chances of approval. Be sure to check your credit report to make sure all your information is correct and actually belongs to you. This will help you avoid identity theft, increase your credit score, and gain approval for your mortgage.
4. Incomplete Application. When applying for a mortgage, fill out many forms. The more information you leave out, the greater chances of denial. Ensure you complete all available forms, provide the correct data, and submit the right documents. As a reminder of earlier points, your loan may be denied if you fail to answer a question about your income or credit.
5. Inadequate Down Payment. If you have less than 20% of your home purchase price saved up as a down payment, you may be denied. Lenders are careful about loans that require mortgage insurance, especially because it will cost them more money. If you have enough saved up to make a significant down payment, you have a much better chance of being approved.

Final Note

Mortgage denial is unfortunate and unacceptable, but you can make a change if you know the reason behind your denial. Remember to improve your application to get the approval for your coveted property.

Contact Mortgage Specialist Today!

Looking for mortgage loans in Arizona? Mortgages by Misty offers flexible mortgage products in Tempe, AZ, allowing you to have a home while accessing the entire Phoenix metropolitan area. Get in touch with us today at (480) 618-5358 to learn more.

If you are considering investing in real estate to rent out long-term or as an Airbnb, congratulations! It is indeed an excellent idea that can bring you a good source of income. But before you start looking for properties, ask yourself if you’re ready to become a landlord.

Are You Ready to Purchase an Investment Property?

 You want to make sure that you’re ready for what buying an investment property entails. Here are two of the things every investment property owner should have:

Financial Stability

Investment properties require a significantly higher stability level compared to primary homes, especially if you intend to rent them out. Many mortgage lenders require borrowers at least a 15% down payment for investment properties. Additionally, you’ll also have to have the property professionally cleared by inspectors. Needless to say, you need to prove that you have enough money to cover the initial costs of buying a house, including the down payment, inspection costs, closing costs, and any maintenance or repairs needed.

Time to Manage Your Investment Property

An investment property requires proper management to deliver the income you want. You need to create advertisements for your rental property, screen potential tenants, ensure their payment on time, perform regular maintenance, and be ready for any repairs needed. If you think you won’t be able to handle these responsibilities as an investment property owner, you should seriously consider hiring a property manager to take care of them all for you.

What to Consider Before Purchasing an Investment Property

Before you start shopping for a place to rent out, there are several factors that you should bear in mind to ensure that you’re making a good investment.

Housing Market Trends and Location

First, you need to know that not all cities are great for renting out your property. Based on the number of available houses, housing market conditions, and the number of people in the area, you should make a choice on what city is the best for you. For example, if you’re planning to rent out your property for at least 3 years, you should consider buying a house or condo in an area that has a growing population. That way, you’re more likely to find people who are willing to rent your place out.

Buying with a Partner

Also, if you’re planning to buy with one or more partners, make sure that you’re on the same page with regard to how you want to rent the property out. Do you want to put up a single advertisement for the entire property and share the income, or do you want to list the place separately and rent it out to different tenants? Do you want to advertise it as one unit or would it be better to list it as individual spaces?

Property Taxes

 It is also important to remember that property taxes in the United States aren’t the same everywhere. Depending on where you buy your property, you might have higher or lower taxes than in other states.  As an example, if you buy your property in a community where property values are low and the overall tax rates are low, you’re likely to have a lower property tax rate than in high-priced communities. Some states also have a property tax rate that varies depending on the area. Also, you should keep in mind that property taxes usually increase over time. So if you’re planning to rent out your investment property for a long time, you should look for a community with a relatively low property tax rate.

Mortgages by Misty is Here For You

If you feel prepared, then now is the time to purchase your investment property. Remember these things when investing in real estate:Find the right property. Make sure that you’re getting a property worth your money. Limit yourself to one or two potential properties and be sure that you can afford them before signing any papers.

Research different  home purchase loan options and consider the possible interest rates, points, and closing costs. Prepare for future expenses. Calculate the amount of money you’re going to need for the initial costs, maintenance, and other expenses that might arise during your ownership. When you’re ready to buy an investment property, get the help of trusted Tempe home loan expert, Misty Garrison from Mortgages by Misty. Let us help you determine the right loan solutions for your specific needs. Get in touch with our team today to schedule a meeting!

Congratulations, you have been pre-approved for a mortgage and have a deal on your dream home. You’ve handed in all of your documentation to your mortgage lender, and everything appears to be on track.

However, once you’ve found your dream home and applied for a mortgage, keep a few things in mind before closing. It’s wonderful to start planning your move and decorating your new home, but before you make any significant purchases, move your money around, or make any major life changes, talk to your lender—someone who is trained to explain how your financial decisions may influence your home purchase loan in Arizona.

After applying for a mortgage, here’s what you shouldn’t do. They’re all essential to understanding—or at the absolute least, helpful reminders—for the process.

Don’t Make Large Purchases, Such As A New Car or Home Furniture

More debt means new duties monthly. New responsibilities entail the acquisition of new skills. People with new debt have a higher debt-to-income ratio. Because higher ratios suggest riskier loans, qualified borrowers may be turned down for a mortgage.

Don’t Co-Sign Other People’s Loans

If you co-sign, you are obligated. This responsibility is also linked to higher debt-to-income ratios. The payments will be counted against you by your lender. You won’t be the one manufacturing them, even if you pledge.

Don’t Put Cash In Your Bank Until If You Haven’t Spoke With Your Bank Or Lender

Cash is tough to track, and lenders want to know where your money originated. Speak with your mortgage officer about how to properly document your transactions before you deposit any money into your accounts.

Don’t Change Bank Accounts

Your assets must be able to be located and tracked by lenders. This process becomes a lot easier when your accounts are consistent. Before transferring any money, speak with your loan officer.

Don’t Submit An Application For New Credit

It doesn’t matter if it’s a new credit card or a new car. If companies run your credit record through multiple financial channels, it will damage your FICO® score (mortgage, credit card, auto, etc.). Lower credit scores can impact your interest rate and, in some situations, your ability to get approved.

Don’t Close Your Credit Accounts

Many home buyers believe that having less credit available lowers their risk and improves their chances of being approved. When you buy a home in Arizona, this is not the case. In fact, your credit history (rather than just your payment history) and overall credit usage as a percentage of available credit are both essential elements in determining your credit score. Both of these scoring criteria suffer when accounts are closed.

Final Note

Any variations in your income, assets, or credit should be evaluated and addressed so that your home loan can continue to be approved. Inform your lender of any recent changes in your work or employment status. It’s advisable to fully disclose and discuss your financial goals with your loan officer before you do anything else.

Even seemingly insignificant activities might impact your chances of obtaining a mortgage loan authorized. Call personal mortgage experts now if you have any queries about the dos and don’ts of mortgage loans in Arizona.

Beautiful communities, sunny weather, good schools, and a thriving job market make this a great place to live. Living in Tempe, Arizona, provides you with numerous advantages and access to the Phoenix metropolitan area. Mortgages by Misty can help you find the perfect home purchase loan in Arizona for you if you’re ready to move into your Tempe property with a flexible mortgage. Contact us today at (480) 618-5358 to learn more.