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These Red Flags that will ruin your mortgage application!

Disputes on Your Credit Report

Having active disputes on your credit report gives your mortgage lender a less than stellar picture of your credit worthiness and can be the reason you get rejected. The best way to avoid getting turned down for your mortgage is to get these disputed issues fully resolved before submitting your application. 

If you disagree with the results of a dispute there are steps you can take.

Recent Hard Inquiries

Having a recent hard pull or hard inquiry on your credit report can be a red flag for mortgage lenders. When you apply for a mortgage it stays on your credit report for two years and will lower your credit score. Though your credit score will only be negatively impacted for a few weeks to a couple of months before it balances itself out again. 

Too many hard inquires in a row gives a poor impression to potential lenders. It can make it look as though you’re looking for quick cash and may not be able to pay it all back. The best way to avoid getting turned down for a mortgage is to limit the lines of credit you apply for at least two years leading up to you closing on your new house. 

Being an “Authorized User”

If you’re considered an authorized user on someone else’s line of credit, it may have a negative impact on your ability to get a mortgage. Being an authorized user can help you to build your own credit file and improve your scores, it’s an especially helpful method of establishing credit for the first time. But it doesn’t contribute to your personal credit worthiness and is considered as part of your DTI (debt to income) ratio, which is a major consideration when it comes time to make your application. 

Major Derogatory Items

Having previously declared bankruptcy or had a mortgage go to foreclosure is going to complicate your mortgage approval process and possibly even get your mortgage rejected entirely. Major derogatory marks on your credit report stay on your report for seven years (from the date of the first missed payment) and most mortgage lenders are hesitant to give a mortgage to someone with one of these on their credit report. It’s not always a deal-breaker, but it will come with strings, such as a PMI. There’s not a lot you can do when you have one of these on your report but wait the 7 years out or find a mortgage that comes with the strings. 

Once You Get Your Mortgage

Call us! The purchase of any home purchase in Georgia requires a licensed real estate attorney present at closing by law. If you’re taking steps to close on your house in the next 30-60 days give us a call! At Frank B. Pallotta Law we are licensed Real Estate Lawyers with 20 years of experience helping our clients in Georgia navigate the closing process. Reach out to us with your questions. We’re here to help.