subject: Reasons That May Cause Home Loan Application Rejection [print this page] The experience of getting rejected for a home loan can be mortifying considering the fact that owning a home is one the basic necessities of anyones life. To make sure that rejection does not derail your plans of owning a good house, one must take adequate precautions so avert such an incident. In order to learn about it, one must first delve in to the reasons which may cause the application to be rejected by the home loan company.
In all the causes can be categorized in to 5 reasons given below:
1.Bad credit rating and blemished financial history
It is highly recommended that one need to check their credit history before making any application for a home loan. One must be cognizant of the fact that the lender goes through the credit history of the applicant before considering the application. An instance of late payments or unpaid dues acts as a detriment towards the qualification of the applicant.
2.Unstable income or unemployment
This is one of the reason due to which a home loan application can be rejected. If it comes to the notice of the lender that the applicant is unemployed or lacks any fixed source of income, they will be doubtful about the capacity of repayment of the applicant and therefore lead to rejection. The candidature will be deemed risky but, if the applicant has collateral that will match the loan amount this may act in the favor of the home loan application.
Hence, to avoid rejection or minimize it one must make sure to include the proof of income in the application to boost the prospects.
3. Outstanding Debts
In case there are outstanding dues to be paid, it will be a bit tougher to avail a good home loan . The lender will be keen to know the reason for such outstanding, and if the answers and not satisfactory then the end result would be unpleasing. The lenders have a policy to do transactions with people who are good payers and borrowers. It is because of this reason that one needs to clear all the obligatory debts before making a home loan application. The outstanding can be credit card bills, car expenses or any types of unpaid loans.
4. Down Payment
Any good home loan requires the applicant to pay a part in the form of a down payment. If the applicant is unable to produce the down payment it will be construed as the inability to make the monthly EMI payments in lieu of the home loan.
5. Lending Limit Excess
If the applicant wants to avail a home loan, it is imperative that he knows the lending limit in the area they live in. The application stands rejected if you exceed the credit limit.
One must make sure that the above mentioned 5 reasons must be duly taken care of before applying for a home loan . If you find that you qualify for rejection based on any of the above reason, it is advisable to check with a loan advisor and seek his expert counsel to find a suitable alternative.
