The Top 10 Reasons for Mortgage Rejection When Buying Santa Cruz Real Estate

Posted by Lauren Spencer on Tuesday, May 5th, 2009 at 9:01am.

Before looking Santa Cruz real estate for sale, you need to know there's a possibility your mortgage application will be declined.  Keep in mind these top ten reasons for mortgage rejection:

1.  You and/or your partner are self-employed.  You'll need to show at least two years of tax returns to prove your income.

2. You recently made a large purchase.  Don't make a large purchase, such as a vehicle or boat, right before or after submitting your mortgage loan application.

3. Too much debt.  Lenders have guidelines for how much debt you have versus how much income you have.  If your debt to income ratio is too high, your application will be declined.  Reduce your debt to income ratio.

4. You applied for a credit card.  Usually, lenders will check your credit at the time you apply and just before closing on the Santa Cruz real estate.  Don't apply for any credit cards within this period.

5. You have liens or judgments.  Check to make sure you don't have any liens or judgments against you.  If you do, get them fixed before applying for a mortgage.

6. You lose your job.  Generally, a lender will verify your place of employment at the time of application and right before closing.  Being unemployed can cause your loan to be declined.  While you don't always know when a company is going to downsize, assess your situation and apply for a loan when your employment is secure.

7. Your loan application is incomplete or inaccurate.  Read the application and fill it out carefully.  Missing or inaccurate information is a common reason for being rejected.

8.  Lying on your application.  Lenders are very thorough when checking your background.  Always tell the truth on your mortgage application.

9. You have an unstable work history.  If you haven't been employed at your job for at least two years, it's possible that your application will be denied.

10. You have a poor credit score.  Poor credit is a definite hindrance when applying for a mortgage.  While there are mortgages for people with bad credit, the interest rates are much higher.  Improve your credit score before applying for a mortgage.

If any of these apply to you, fix the issue before you apply for a mortgage.  This can save you a lot of heartache down the road.

With the reduction in prices of Santa Cruz real estate, now is an amazing time to buy.    Call me today at 831.662.6522 or email me at  I can show you some great buys.



1. Mortgage loan

2. Liens

3. Credit score

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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