In the present scenario, purchasing a house has gone beyond selecting a property and paying for it. For a middle-class person, it turns out to be one of the biggest financial transactions. After all, arranging the needed amount without hampering future commitments is not an easy task.
In the pursuit to buy a house of dreams, home loans help significantly. However, almost every Bank and financial institution follow a specific well-structured process for approval. Through this procedure, the lender ensures that there are no major hiccups at the time of retrieving the money.
During this stringent process, most of the times, loan applications get rejected as well, leaving you nothing but disappointed. However, don’t fret! If you are familiar with the reasons that may lead to a Home Loan rejection, you might be able to prepare yourself better. Let’s understand more about the same in this post.
A Credit Score signifies the creditworthiness of an individual. If you have a low credit score, for sure, banks and financial institutes will shy away from accepting your loan application. In most of the cases, you may have to put something as security or bring a financial guarantor.
Of course, there could be several reasons for having a bad score. Whether you have missed EMIs, didn’t pay card dues, or have defaulted a previous loan – all of this will reflect that you might not be a trustworthy person as far as paying back the loan is concerned and could add to one of the home loan rejection reasons for you.
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Employment issue could be another home credit rejected reason. If there have been issues with your employment, it can directly impact the lender’s decision to offer you a loan. This Factor is assessed on several parameters, such as:
Since a home loan is one long-term responsibility, you must have a stable career with a stable monthly income.
Every lender, whether a bank or a private entity, has a specific eligibility criterion for a home loan. Generally, most of the lenders would prefer those borrowers who are anywhere between 18-65 years of age.
If you have just started your professional life or are nearing retirement, the possibilities of rejection remain higher. However, if you would like to opt for a loan that comes with a shorter tenure, things may go well for you.
If your application got pre-approved, definitely it could be a thing to celebrate for. However, most of the times, even a home loan rejected after pre-approval turns out to be a possibility. The reason behind this could be the borrower opening more credit lines.
The more you take credit, the deeper you will be in debt. And, this can impact your loan application directly. So, try minimizing your debts as much as possible.
Now that you have understood some of the reasons for home loan rejection, here is how you can prepare yourself.
If you think your credit score is messed up, make sure that you improve it before putting in your application. To do so, have a record of making timely payments. Also, you must cross-check errors in your Credit Report. For this to happen, acquire your report twice a year and evaluate it cautiously.
One of the primary reasons, if everything else seems at the place, for rejection could be incomplete documentation. Thus, you would have to be extremely meticulous in this aspect. Make sure that all of the documents, as asked by the lender, are in order. Even the smallest mistake, such as wrong spellings of the name or mismatched address, can lead to rejection.
As much as you may find other companies, Offering attractive packages, staying in a single company for years altogether can benefit you in several ways. Thus, if possible, avoid changing jobs as frequently as you may already be doing. This will stimulate your home loan application and increase chances of acceptance.
In a nutshell, getting the home loan application rejected or accepted is simply in your hands. The lender has the right to appraise eligibility on the basis of where you are working, how much you are earning, and the documents that you are putting forward. So, keep these reasons for rejection and cautionary tips in mind to avail the loan and buy the house of your dreams.
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