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5 Barriers to Getting a Mortgage

Amy Fontinelle of Investopedia put together a great article on the 5 new barriers to getting a mortgage. I wanted to pass the information on to you.

Are you having trouble getting approved for a mortgage? Ever since the economic downturn, lenders have been subjecting mortgage and refinance applicants to stricter criteria. Here are five reasons why people are finding it more difficult to get approved these days.

1. Lender paranoia
With lenders facing greater responsibility for the loans they originate, they have no choice but to be extremely cautious in approving borrowers.

2. Restrictions on eligible income
Do you earn income from a second job? While this money might be significant to you, providing some real breathing room in your monthly budget and stability in your finances, lenders might not care.

3. Tighter income-verification standards
Lenders will now rigorously scrutinize any income that borrowers want to be considered in their ability to repay a loan. There are no stated-income or low-documentation loans for most borrowers anymore, which is bad news for self-employed borrowers.

4. Greater scrutiny of credit reports
If you manage to get pre-approved, don't let your guard down. If you take any action that affects your credit score or any item on your credit report, you'll have to explain it to your lender.

5. Uninformed and/or inexperienced loan officers
Gone are the days when anyone who could fog a mirror could get approved. So if you want a mortgage, don't pick just any old loan officer. Find one with expertise.

Asking a trusted family member, friend, co-worker or real-estate agent for a referral to a loan officer also remains a good way to find originators who know what they're doing.


Published Thursday, October 21, 2010 8:19 PM by Joe Prunty

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