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What To Do When Your Real Estate Loan Is Declined

Saturday, June 28, 2014   /   by Fra Jamir

What To Do When Your Real Estate Loan Is Declined

There are many reasons why a mortgage loan for your Charleston real estate could be declined.  It doesn’t have to be the end of your real estate dreams.  Here are a few things to consider if you’ve been turned down for a mortgage:


 


Loan-To-Value Ratio


The loan-to-value ratio (LTV) is the percentage of the appraised value of the Charleston real estate that you are trying to finance.  For example, if you are trying to finance a home that costs $100,000, and want to borrow $75,000, yourLTVis seventy-five percent.


 


Lenders don’t like a high LTV.  The higher the ratio, the harder it is to qualify for a mortgage.  To reduce the percentage, you can save up a bigger down payment.  Some lenders may approve the loan if you buy mortgage insurance, which protects the lender in the case of default, but makes your mortgage payment higher.


 


Credit To Debt Ratio


Lenders will be less likely to approve your mortgage loan if you have a high credit to debt ratio.  The ratio is figured by dividing the amount of credit available to you, on a credit card or auto loan, and dividing it by how much you are currently using.


 


High debt loads will scare away most lenders.  Try to keep your debt to under fifty percent of what is available to you.  Lenders will appreciate it, and you will be more likely to be approved for a mortgage.


 


No Credit Or Bad Credit


Few things can derail your mortgage loan approval like credit issues.  Having no credit record can be as bad for your approval chances as bad credit.  With no record of timely loan payments from anywhere, a lender is unable to determine your likelihood to repay the mortgage.  Some lenders will consider other records of payment, like utility bills and rent reports from your landlord. 


 


If you have frequent late charges or collections, you’ll need to work on getting those paid on time, every time.  There aren’t many lenders who’ll approve someone with bad credit, especially in today's market.


 


Talk to your loan office to determine which problem applies to you, and learn the steps to fix it.  Then, you can finance the Charleston real estate of your dreams.


 


Interested in selling your Charleston area home? Visit: www.jeffcookrealestate.com


Interested in buying a Charleston area home? Visit: www.discovercharlestonareahomes.com


 


-Jeff Cook


Jeff Cook Real Estate


Charleston, SC