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You are here: Home / Our Tips / 7 Common Reasons for Mortgage Denial

7 Common Reasons for Mortgage Denial

January 6, 2021 By Ralph Gates

It’s frustrating when you get rejected for a mortgage when you are ready to buy a new home. There are common mortgage denial hurdles borrowers face when they are turned down for a mortgage. Each lender is a bit different, but there are certain categories that lenders consider when deciding whether to approve your for a mortgage or not.

If you are turned down for a mortgage, learn what your mortgage denial reasons are. With the experience you have gained, it is possible that you can clean up your credit quickly in order to be successful the next time you apply for a mortgage. Find out the specifics of your denial and work to change your credit profile so that you can purchase the home you want.

1) There’s a History of Late Payments

Late payments show your lender that you are not consistent in paying back your bills. You can see your late payment history in your credit report. Look at your percentage of late payments to see where you can improve. If you have unresolved debt, this can accrue as a late payment every month. 

2) Your Debt to Income Ratio is Too High

Your lender will look at how much debt you have and what your current income is. Most lenders will approve a mortgage if your debt-to-income ratio is around 30 percent. If you owe too much debt, lenders are hesitant to lend to you because it is more difficult for you to pay back your loan.

3) An Inconsistent Employment Record

Lenders want to know that you are responsible, and this shows in your employment record. If you are always changing jobs, or you have a poor work history, your ability to pay back a mortgage is in question. If your employment record is inconsistent, stay at your current job. Wait six months and apply again.

4) You Can’t Pay Closing Costs

You can be denied for a mortgage if you don’t have enough money saved to close on the deal. This is an issue you might be able to work out with the seller if they are eager to sell. There are times when a seller will pay for the closing costs in order for the deal to go through. 

5) The Home Appraisal Doesn’t Match Up

When you get a home appraised in order to get a mortgage, the appraisal has to match the amount you are trying to borrow. This means you can’t offer way over the asking price for a house and expect to get a mortgage for the entire amount. If the appraisal is much lower than what you offered, you may be able to re-negotiate with the seller.

6) Your Bank Account Has Some Red Flags

Mortgage lenders take a look at your bank statements and will deny your mortgage if there are too many red flags. Bounced checks for insufficient funds are a red flag, as are big deposits of cash with no clear source. 

You Have Minimal or Bad Credit

While you might be able to get a mortgage with a lower credit score, it’s important to raise your score before applying. If you have no credit history, you can be denied a mortgage.

How to Bounce Back From a Mortgage Denial

Check with your lender about how much time you should wait before applying again. Find out exactly why you were denied a mortgage, and work to fix the issues. Make a plan and stick to it. You will eventually get a mortgage when you put in the work.

Don’t lose hope when you have been turned down by a mortgage lender. Make the changes that you need to make, and you will get approved. Contact Mid America Mortgage today to learn more about your mortgage options.

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Filed Under: Our Tips

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Mid America Mortgage Services, Inc, NMLS #1142067
200 E Walnut St.
Columbia, MO 65203

Phone: (573) 875-1100

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"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John

"My family owns Tiger Ice Company. My experience with Ralph at Mid America started with Tiger Ice because we needed to expand our facility. When we went in to talk to Ralph at Mid America, he pretty much was straight up with us and told us we needed to go back to the drawing board. We came back with new numbers and a new plan, and we built the facility and everything was fine. Our dream of that would not have been possible at all without Mid America Mortgage Services, Inc and Ralph. They don’t tell you what you want to hear, they tell you the truth and that's what we weren't getting from other banks."

Andy

"When we were 18 and 19 years old no one wanted to help us get started. But Michelle took us under her wing 6 years ago next month. There is a lot of people out there that could of taken advantage of us many of times because we had no idea what was going on. For Michelle to stand beside us and walk us through, and not let us get into something that could get us in a lot of trouble means the world. We thank Michelle and we are extremely blessed to be able to work with her and her team. I have never even thought about talking to another lender and will always be loyal to Mid America Mortgage Services, Inc."

Cody and Morgan

"They really explained the process to us very well and made us feel very comfortable, specifically Jeanie Byland. I have never asked a question that I felt dumb about. They really wanted to educate us and have been fantastic. The interest rates changed one day and they called me to say, ‘Hey we might ought to look into refinancing your loan’. I really felt like they had our best interest at heart."

Steve

"My wife and I have moved around quite a bit with my job so we have been through the process before, but we have never had anybody help us as much as Michelle West Mid America Mortgage Services, Inc did. We needed a loan for a new construction home and they were able to help us out with all of our needs and make us feel comfortable with what we were doing moving forward. They did a good job of walking us through the paperwork to make sure that we were pre-approved for a certain amount."

Jason

Selling our home of 17 years and building a new home was a very emotional time for our family. We were ready for the next adventure in our lives but knew there were numerous steps involved. The search for a mortgage officer was simple, Michelle was our choice. Her guidance and knowledge made the process as easy as possible. When we had questions, she was always there to give us an answer and discuss our options. The employees of Mid America Mortgage Services, Inc like Michelle will keep us returning for our mortgage needs.

Chad and Julee

"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John

"I knew Jeanie Byland for a long time. She made the process so easy. One of the things I probably appreciated the most was that she didn't want to spoil the excitement of closing on a new house by showing up on closing day finding out that we owe a lot more than we thought. They were upfront with that information right from the get-go, and that’s because it’s just like they say, ‘They wouldn’t put you in a loan that they would be comfortable taking themselves.’”

Jamie

Michelle, I want to thank you for all of your efforts on the loan. I never knew how much information the needed! I appreciate your personal nature and ease of working together. Thank you for making this happen! :)

Amy

"I’m a very loyal customer at Mid America Mortgage Services, Inc. I have an addiction to building houses and designing them, and they are always right there with me every step of the way helping me get the best loan product and the best rates whenever I am ready to build. They make sure you don’t get a loan that you can’t afford. The whole process was very smooth. I would recommend Mid America Mortgage Services, Inc to anyone because they are always there to teach you, help you, and make it easy for you every step of the way."

Kate

"One of the main things that I loved about Michelle was she was so organized. She would meet us at any location she needed to, and to be honest she had the absolute lowest interest rate. They were always very transparent with fees so there were no surprises. Michelle was always super easy and we would always run in talk to her even it was for a few minutes. The best thing was the process was very, very smooth."

Chris and Jamie


Phone: (573) 875-1100
200 E Walnut St, Columbia, MO 65203

 

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