Avoid a Loan Denial
Every year, more than 1 million mortgage applications are denied. Avoid a loan denial and being part of this statistic! Borrowers have tools to turn a loan denial into an approval by planning before applying. The 1 million denials do not include the number of applications which were withdrawn. Many borrowers apply to more than one lender. The Consumer Finance Protection Bureau (CFPB) gathers statistics across all lenders. CFPB data shows about 30% of those applications which were denied were denied due to problems with the Debt To Income Ratio (DTI). DTI ranks as the #1 reason for being denied a mortgage loan. Credit issues fell a distant second at 20% of denials. Problems with Loan to Value Ratios eliminated another 15% of mortgage applications.
We all see thousands of commercials for monitoring and fixing your credit. Credit Scores are all the rage. So why is the focus on credit scores more than the #1 reason for mortgage denials? Because no company earns money for monitoring or helping with DTI! Individuals have been convinced to pay for credit monitoring as if the credit score is an us against them challenge.
Manage Your DTI and Qualifying Information
Borrowers might be able to lower their DTI ratio by 5% to 10%, depending on the type of debt the borrowers have. In Winning Mortgage, Winning Home, we provide an example how to change your DTI. A borrower might bring a DTI from over 50% (automatic denial) down to 45% (possible approval) or less to qualify for a mortgage. In addition, bringing a DTI under 36% yields additional benefits. DTI’s over 36% may require a higher credit score, more cash in reserves, or a combination of the two. You may already have the tools to lower your DTI by 5% or more!
What if you can move the DTI a couple of percent to put you under 36% without spending a dime? This makes a smoother approval possible, less chance of additional conditions, and approval with a lower credit score. No illegalities, no costs, no chicanery, no hiring outside companies and paying them fees. It’s a simple planning move available to everyone. Can it work for all borrowers? No. Can it work for you? Possibly. Is it worth 10 bucks to buy a copy of the book if you know you don’t qualify now due to a DTI which is too high in order to find out if this solution works for you?
Get Prepared
If you don’t know what your DTI is right now, you definitely need to buy a copy of Winning Mortgage, Winning Home. Why be denied by being unprepared and waste potentially thousands of dollars and hundreds of hours on house hunting, contracts, earnest money, appraisals, applications, inspectors, and other purchasing requirements if you aren’t prepared?
Avoid collection scams which could put you deeper in debt by siphoning off much needed money. You may get contacted about collections and threats which would impact your ability to get a loan. Be careful not to fall for phony ones thinking you need to clean up credit.
