This guide covers the frequently asked question of whether can you get denied for a mortgage with good credit. Income, credit, credit scores, assets, and liabilities are all majorly in the mortgage approval process. Two of the most important factors at the initial mortgage qualifying state are debt-to-income ratios and credit scores. Income plays the most important role in calculating debt-to-income ratios. However, just because you have good income and good credit scores does not guarantee mortgage approval. A borrower’s credit report and credit scores are carefully analyzed and scrutinized.
How Do Underwriters Analyze Credit Report and Scores
Can you get denied for a mortgage with good credit? The answer is yes. Credit Scores are not the only factors in getting a mortgage loan approval. Borrowers can have good credit scores and qualify for a lender’s minimum credit score requirement. However, there is more to deciding whether borrowers qualify for a mortgage loan approval.
Reasons Why You Can You Get Denied For a Mortgage With Good Credit
Can you get denied for a mortgage with good credit? This is a frequently asked question at Gustan Cho Associates. Borrowers can have high credit scores and not qualify for a mortgage. In the following paragraphs, we will discuss what mortgage underwriters look at when reviewing credit reports and scores—no late payments in the past 12 months.
For borrowers who have a late payment in the prior 12 months, it does not mean they will get a home loan denied. Late payment in the past 12 months will not look good. A good letter of explanation is required.
Overall payment and ovverall credit history is looked at. Mortgage underwriters will examine the applicants’ payment patterns for several years. can you get denied for a mortgage loan with good credit scores? Borrowers can have a good credit score with a poor payment history. If there is a late payment history, it will not look favorable. Underwriters can look at mortgage applicants as being financially irresponsible. Again, if this is the case, a detailed letter of explanation will be required. Poor payment history can be grounds for a mortgage loan denial, even if borrowers have good credit scores.
Can You Get Denied For a Mortgage With Good Credit With Credit Disputes
Credit disputes on a credit report are prohibited during the mortgage approval process. Zero balance items can be disputed. However, any credit-derogatory items with open balances are not allowed. The disputes must either be removed or the balance must be paid. A new credit report must be pulled to show those credit disputes removed. Removing credit disputes from a credit report can lower borrowers’ credit scores.
Outstanding Collections and Charge-Off Accounts
Open collections, judgments, tax liens, charge-offs, bankruptcy, foreclosure, deed-in-lieu of foreclosure, and short sale records are evaluated. Student loans cannot be in collections and must be current or have a deferment or forbearance. Borrowers will not get approved if they have a delinquent government account.
Judgments and Tax Liens
Judgments are frowned upon. Borrowers need a payment agreement with the judgment creditor. Three-month proof that he or she has made timely payments via canceled checks. Tax liens are not allowed unless there is a payment agreement in force. At least a three-month payment history needs to be verified via three months of canceled checks. Open collections are fine and do not make any payments if you have outstanding open collection accounts. Paying an old or partial collection account will re-trigger the old derogatory credit and report it as fresh, dropping credit scores by more than 80 points.
Qualifying For a Mortgage With a Lender With No Overlays
The borrowers will likely get mortgage loan approval if they have a good income and credit scores. However, borrowers should not just assume a mortgage approval is guaranteed. Borrowers who have had prior credit issues and now have re-established credit, please get in touch with Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at alex@gustancho.com.
Not All Lenders Have The Same Lending Requirements
Not all lenders have the same lending guidelines. Over 80% of our clients at Gustan Cho Associates are folks who could not qualify at other lenders. We will be more than happy to advise you in getting a guaranteed mortgage approval. The team at Gustan Cho Associates are mortgage brokers licensed in 48 states, including Washington, DC, Puerto Rico, and the U.S. Virgin Islands, with no lender overlays on government and conventional loans. We are available 7 days a week, evenings, weekends, and holidays. Text us at 800-900-8569 for immediate response. Borrowers can also email us at gcho@gustancho.com.
