subject: Problems with getting mortgage for a house [print this page] Problems with getting mortgage for a house
The process of evaluating a candidate for a mortgage is quite complicated and takes multiple factors into the account. Just like with the process of credit scoring, you will not be able to learn the exact mechanics behind, but there are things we know work for and against you. Read on to discover how to ease the process of applying for a mortgage.
First of all, don't even bother approaching mortgage brokers before checking your credit score. Your credit history determines interest rates and type of mortgage you will be offered so it's fairly important. It is estimated that around 3/4 of credit reports contain some errors it may be anything, like for example electricity provider falsely claiming that you're late with payments. Not a big deal, it's just an error but will have a massive impact on the mortgage application. Credit report needs to be checked thoroughly and only then trip to a mortgage broker makes sense.
Another reason for problems with mortgage andmortgage rejection is the so called overcommitment'. It's when lender decides that in your current financial situation mortgage would add too much to your monthly expenses. If, for example, your monthly expenses include repaying car loan, wash machine and computer finance, credit card bills, and a lot more admit it, you really may be overcommited'. The ideal situation would be to pay off all the financed purchases and card bills, and only then apply for mortgage.
Lenders do check if the price you agree to pay for a property is in line with an actual value. It's a common practice for property sellers to increase the list price, so that when you negotiate it down it feels like a great deal, but in fact it's exactly how much seller wanted you to pay for the property. If possible, have an independent expert value the property and then decide whether it's feasible to carry on with negotiations.
Even though it goes without saying, lying will get yourmortgage rejected in a record time. First thing that comes to mind when trying to enhance' application is increasing the amount of annual income. It's a very bad idea, first of all because lender will ask for bank statements which clearly show the actual amount of your earnings, secondly because if (through someones error, I suppose) it gets through, the monthly repayments will be calculated to work well with the claimed earnings. Since your real earnings may be lower, you may struggle financially.
