Friday, October 17, 2014

3 Major Reasons Banks Reject Mortgage Loans

Compared to a few years ago, getting a home loan at the Lake of the Ozarks can be tough. Lenders only accept about 55% of all mortgage applications.  If you're thinking about purchasing a home in the near future, now is the time to start your research and make sure you are prepared to do everything you can to get approved.  Here are 3 major reasons banks reject mortgage loan applications from DailyFinance.com:

1. Improper Income Documentation


Having great credit doesn't automatically mean that you will be approved for a Lake of the Ozarks mortgage loan.  If you can't prove your income and back it up with tax records, you won't be able to get a loan. Some income related activities to avoid if you're planning to apply for a mortgage loan would include job hopping, gaps in employment, not having two consecutive years in the same industry or moving from a salaried position to commission-based work.  All of these activities make it difficult to document your track record and true earnings history.

2. Lack of Strong "Compensating Factors" 


In mortgage industry lingo, a "compensating factor" is a positive aspect in your mortgage application to offset other negatives.  Examples of these factors would include:
  • A large down payment, more than 20%
  • Lower than normal loan-to-value ration, less than 80%
  • Lots of cash reserves, 12 months or more
  • High credit score, above 740
If your application has some issues and you're on the borderline of qualifying because maybe your debt-to-income ration is a little high, compensating factors could help strengthen the application.

3. Property Type


Many Lake of the Ozarks mortgage lenders can be leery of certain types of properties such as second homes and investment properties.  There are funding options for these types of properties; however, they carry more stringent terms such as bigger down payments and more cash reserves. Newly developed condos can also fall in this category.  Many banks won't lend money on condos unless 70% or more of the units have been sold and lenders won't issue mortgages on condos that aren't on the FHA's approved list of condos.

For the full article with additional reasons, please visit: http://www.dailyfinance.com/2010/05/17/7-reasons-banks-reject-mortgage-applications-and-how-to-get-app/

When it comes to your financing needs, I'm committed to working with you every step of the way. I'll discuss financing options, offer competitive interest rates and back it up with the FIRST Class Service you deserve and I guarantee.  Contact me today at 573-746-7211 to get started on a mortgage for your new home at the Lake of the Ozarks!

For Lake area news, resources and tips on financial services, please 


Michael Lasson
Sr. Residential Mortgage Lender
NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049

Direct:  (573) 746-7211

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