Redfin recently feature E5 Home Loans’ Owner, Larry Cappelletti in an article on underwriting. Larry’s guest contribution discussed reasons why a mortgage application might be denied. There’s some great info in the following excert and things to watch out for in the process.
To read the entire article, visit Redfin
Income, assets, and credit history
It boils down to the applicant’s income, assets, and credit history. Common issues surrounding income include an insufficient history of work, work hours that vary too much over a short period of time, not being able to verify overtime or bonus income, recently switching from hourly pay to commission, and recently starting a new business as primary income.
With assets, underwriters need to know where the applicant acquired the money. The sources of large deposits and gifts need to be explained and documented. A bad loan officer or loan processor can sink a loan application if they do a poor job of asking questions about an asset’s source upfront.
The final factor is credit. Past derogatory credit events that can prevent loan approval include major or recent late payments, repossessions, bankruptcies, and foreclosures. A credit report is verified very early in the loan process, and every loan product has specific guidelines regarding credit history. – Larry Cappelletti (NMLS 157933), Owner/ Senior Loan Officer at E5 Home Loans in Phoenix, AZ