Overcome These 5 Mortgage Application Obstacles
How To Overcome New Barriers To Getting A Mortgage!
Getting approved for a mortgage is no easy feat and there are many mortgage application obstacles that you have to overcome when applying.
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Fortunately, it’s possible to get around many of these obstacles by a) taking the time to prepare yourself and b) finding the right lender.
Read to find out more…
5 Mortgage Application Obstacles
For first time buyers, the biggest obstacle is typically the down payment.
The average down payment in the US is between $10,000 and $15,000 (5 to 6% of the average home).
In cities, it can be more than double this.
Just how do first time buyers save up this amount of money?
If you’re not lucky enough to have parents to help you and you don’t want to live extra frugally for years, there are other options.
Many states have down payment assistance programs including grants to help contribute to your down payment.
There are also low down payment mortgages available at 1 to 2% for young first time buyers – they’re not common, but they do exist.
Many people get rejected for not having a high enough income on the basis that they won’t be able to afford to pay back their mortgage.
This is often unfair – particularly for those who are already paying higher monthly rent than they would be in monthly mortgage payments.
Fortunately, you don’t need to have a high flying job with a top end salary to afford a mortgage.
In fact, even with a fairly low income, you can get approved by shopping around for the right lenders.
Companies such as The Change Company are able to help those on a low income get access to finance.
Instead of trying to use regular lenders and brokers, consider these specialist companies.
Poor Credit Score
Having a low credit score could result in your being denied a mortgage.
Worse still, being rejected by a lender can reduce your score further.
Low credit mortgages exist, but typically have catches such as a high down payment or very high interest rates.
A better way to get around this problem is to look into quick ways of boosting your credit score.
This could include taking out credit score builder loans, partly paying off credit cards and making sure that you’re on the electoral roll.
Some people think that once they pass the age of 50, they’re too old to be considered for a mortgage, but this is typically not the case.
While some countries do have restrictions in place, laws in the US actually make it illegal to discriminate based on someone’s age – whether you’re 40 or 90.
In some states, you can be too young to take out a mortgage.
For example, in Virginia you have to be over 18 to take out a mortgage.
A lot of 18 to 20 year old applicants get rejected, but this is typically due to income-related reasons or lack of credit score rather than age.
The final obstacle that many lenders overlook is the property itself.
A property that is very old, in poor condition or made of unusual material may not be mortgage-able when applying via a conventional lender.
However, there are many specialist lenders out there who are happy to lend money for older properties, fixer-uppers or homes not made of brick.
If you’ve got your eyes on one of these properties, make sure to avoid regular lenders and look for one that is a little more specialist.
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