A new study from the Consumer Financial Protection Bureau found more loan applications were denied due to “insufficient income” in 2022 than in previous years. These denials keep renters locked out of the most valuable financial investment available to American families and keep homeowners from unlocking their hard-earned home equity. The cause behind tightening lending guidelines lies in slow wage growth, record-breaking home values, and higher monthly payments.
I want to empower you to realize your home ownership and home finance goals by revealing the blueprint to a successful mortgage application
Understanding the Mortgage Landscape
In today’s real estate world, financing requires navigating a complex and challenging mortgage landscape. Low home inventory, rising property prices, and interest rates make it harder to get approved for financing because those larger loan amounts and higher monthly payments take a bigger bite out of your paycheck. This scenario makes home financing difficult for borrowers based on their income, especially those eyeing homeownership or seeking to tap into their home equity.
One of the things that I love about the team at Milend is that they get more borrowers approved than your typical mortgage company. Everyone I work with understands that every financing story is unique, and we have special programs designed to get more borrowers qualified based on their income.
Optimizing Debt-to-Income Ratio (DTI)
Debt-to-Income (DTI) ratio is calculated by comparing total monthly debt payments to their gross monthly income. Lenders use DTI to gauge the risk associated with lending to a particular individual. When applying for a new loan the Debt-to Income ratio will include the payments of the proposed new home loan added to your current debt. It’s one of the key ingredients to whether your loan application gets approved or denied.
If you have big auto loans or credit card balances, that raises your debt load. If this sounds like you, don’t worry. Our mortgage consultants work with homeowners in this situation all the time and can craft a tailored plan to help you get financed and reduce your total debt load.
Leveraging Credit Scores for Success
Your credit history is like a financial report card, reflecting your creditworthiness to potential lenders. A higher credit score generally signifies responsible financial behavior, making lenders more likely to approve your loan application at more favorable terms.
Our team works with borrowers who have a wide range of credit scores and all of our experts take the time to find the possible financing terms for you, even if you have less-than-stellar marks on your credit history.
Assessing your Financial Readiness
Income, Debt-to-Income ratio, and Credit History are the core factors that influence whether your loan application can be approved or not. These guidelines have gotten tougher due to market and economic factors, but you don’t have to do all the heavy lifting to assess your financial readiness on your own.
Milend has a proven track record of helping more borrowers get approved for home financing. Contact one of our loan experts to get an assessment of your financial readiness for a mortgage to purchase a new home or refinance. They’ll look for programs to overcome hurdles in your income, DTI, and credit factors. If it’s not the right time, they’ll help you plan for improving your financial picture to get you approval-ready in no time!
Your Ultimate Winter Home Preparation Guide
Read more...