Imagine, you've found your dream home. It checks all the boxes to fit your Colorado lifestyle, has sweeping mountain views, and you're ready to take the leap. If your mortgage gets denied, this can be incredibly disappointing and is likely much more common during these difficult times. Here at Team Lassen, we'll always be here to help make your homeownership goals a reality which is why we've compiled a list of the top 3 ways to avoid being denied your mortgage. 

Ensure You Have a Verifiable Income Source

Employment history is often key here; you want to avoid unemployment gaps as much as possible. Job-hopping and long periods where you have been out of work don't look good to a mortgage lender. While we navigate COVID-19, this may be impossible to avoid for many Americans. However, if you have two years of steady employment or at least two years of self-verifiable income, this can help you immensely. If there are other income sources, such as an inheritance, make sure to bring that to your mortgage lender's attention.  

Improve Credit History

A low credit score is the main reason why potential home buyers are denied a mortgage. If you have a history of late payments, have had accounts sent to the collection agency, or simply have never built up your credit, it can be a challenge to get approved. To help improve your credit history, take the time to review all your credit reports and check for errors. If everything looks to be accurate, wait to apply for a mortgage until you have paid down your credit cards. Make sure that you are spending responsibly and making payments on time.

Improve Your Debt to Income Ratio

When mortgage lenders are considering your application, they always calculate your debt to income ratio. Essentially, they take all of your monthly payments into account including your theoretical mortgage and divide it by your monthly gross income. If you have a lot to pay in terms of credit cards, student debt, car payments, etc. this will increase your ratio. Ideally, lenders like to approve applications when a potential home buyer's ratio is below 36%. If yours turns out to be much higher, think about taking some time to pay off some of your debt or loans. 

If you have more questions about why you may have been denied for your mortgage, please don't hesitate to give us a call. Team Lassen serves the entire Front Range and our clients will always be our top priority. Let us help you secure your dream home!