40 Most Common Reasons Loans Get Denied

Dated: 06/17/2019

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If you're considering buying a home, whether that be a replacement property, investment property, or your first home, it's important you enter the home buying market guns blazing. What we mean by this is that, while the market is showing signs it's a good time to buy (rates are low, inventory is up, appreciation has slowed), this doesn't mean that once you make an offer on a home it's a done deal. Aside from continuing buyer competition, there is also the chance that the deal falls through because of your financing. That's right! If you're need a loan in order to purchase a home, that loan could be the cause of you losing the home if you don't properly prepare and choose the right lender. A good agent will point you in the direction of the right people. Above that, the best agents will know how to prep or "stage" you as a buyer so something like this doesn't happen to you. 

The following is an in-depth list of deal killers which are all too common, many of which can be resolved IF a loan officer has time to adapt and restructure the loan package as the contingency deadlines loom!

  1. FHA or Fannie loan limits are too low for the county the property is located in

  2. Little or No Income reported on Tax returns

  3. Poor credit management 

  4. Buyer shows large losses on rental properties

  5. High DTI (Debt to Income) Ratios

  6. Mortgage rates rise dramatically

  7. Buyer changed careers recently

  8. Job history limited / Inconsistent

  9. Inability to verify key info i.e. bonuses, overtime, liquid assets

  10. Not enough liquid reserves after COE (2-3 months for conventional – (FYI: Zero for FHA /  VA) – 6-12 months for “Jumbo loans”

  11. Buyer is a co-signer for other loans

  12. “Layered risk” – too many “questionable or conflicting issues” about the buyer who is evasive

  13. Collection Accounts other past credit delinquencies

  14. Self-employment issues

  15. Limited credit history Credit scores too low

  16. “Down payment/ Gift” money isn’t seasoned or traceable (i.e. “mattress money”)

  17. Inheritance sale – squabbling among siblings or probate sale moves too slowly thru the court system

  18. Termite Issues

  19. Past foreclosure, short sale, BK

  20. Property not really owner-occupied

  21. Undisclosed liabilities – the investor always discovers them

  22. New or recently closed credit accounts

  23. Buyer’s or Seller’s unpaid tax liens/ unpaid child support / student loans

  24. Credit bureau errors

  25. Inexperienced loan officer

  26. Divorce issues for buyer or seller

  27. Solar lease on subject property

  28. Simple clerical errors

  29. Fraud

  30.  Undisclosed relationships with seller – non-arms-length transaction

  31. Buyers attempts to buy multiple properties at the same time (occupancy fraud)

  32. Property doesn’t appraise at value

  33. Defects on property / non permitted work

  34. Giver of Gift $$ can’t or won’t provide proof of funds

  35. Poor communication between Escrow - RE Agent - Loan Officer

  36. HOA Issues (litigation / under insured)

  37. Low owner occupancy (Less than 50% for FHA)

  38. One condo owner owns too many units in complex (10% +)

  39. Lender “overlays” additional underwriting criteria over & above what Fannie -VA- FHA requires

  40. Seasonal Issues ie. long weekends / vacation times ( Christams / New Years) - National Holidays -FLU season

Want to know how to void all 40 of these, stage yourself as the best possible buyer, and save money while you're at it? Call our 24/7 recorded hotline at 877-957-6677 and listen to our recordings for Saving Buyers Thousands. 

The Kurt Real Estate Group | Distinct Strategies. Record-Setting Results. 

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Kurt Galitski DRE#01348644

Distinctive Strategies that Deliver Record-Setting Results When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. Bu....

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