Barry Ripp ~ East Bay Area Real Estate

Last year, more than two million people were turned down for home loans, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more strict in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection. 

• Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
• Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
• Poor credit: Lenders typically reject applicants with FICO scores below 620.
• Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
• Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
• Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

Related articles

• How to Boost Your Odds of Getting Approved for a Mortgage (dailyfinance.com)
• First-time buyers hit by lenders’ caution (guardian.co.uk)
• How to Know if You Qualify for a House Loan (thinkup.waldenu.edu)

Here are 5 more ways you can reduce the risk of having your identity stolen.

• Click with Caution. When shopping online, check out the website before entering your credit card number or other personal information.
• Check your bills and bank statements. Open your credit card bills & banks statements right away. Check them carefully for any unauthorized charges and report them immediately.  Call if your bills don’t arrive on time…it may mean that someone stole your mail or changed your contact info to hide fraudulent activity.
• Stop pre-approved credit card offers.   Those make a tempting target for identity thieves who may steal your mail. Go to: www.optoutprescreen.com .
• Ask Questions.  Ask questions whenever your asked for personal information that seems inappropriate for the transaction.  Ask how that info will be used or if it’s shared with others.
• Check your Credit Report.  One of the best ways to protect yourself is to monitor or credit history.  You can get a free report every year for free from each of the three credit bureaus. One source is:  www.annualcreditreport.com .

I hope this information is helpful for you.

You can find more information about cyber security and safeguarding your personal information at the  California Office of Information Security: http://www.cio.ca.gov/OIS/

Maintaining a good credit score can help you in a number of financial situations.  For example, most lenders use your FICO score to judge credit worthiness.  FICO stands for Fair Isaac Corp. which analyzes credit information to come up with a score.

A good score can mean a lot when it comes to your interest rate for car loans and home loans.

One key to keeping a good credit score is a combination of continuing to use your credit responsibly and paying down balances as soon as you can. I think it’s better to pay your credit cards off each month to avoid paying the high interest.  So don’t buy more than you can afford to pay off.

To make sure you don’t have any credit errors, check your own credit at least once a year. You can get a free report from each of the three credit reporting agencies.

For a free copy of your credit report from all three agencies, you can visit: www.annualcreditreport.com  They will ask several questions to insure security and also ask you to pay for an upgraded report, but a free report is available.

I hope you find this information helpful. I feel we all need to be more careful about using credit. But credit can be a useful tool when we need it.

 ~ Barry