1) Gambling habits Bank statements detailing payments to bookies can instantly stop an application in its tracks, brokers warned – even when the borrower is an otherwise perfect candidate. Malcolm Davidson, managing director at mortgage broker UK Moneyman, told us of a case in which one of his clients had a perfect credit history, but a. If gambling forms 100% of your income, a slow month is more likely to affect your ability to meet your mortgage payment. A lender would prefer if you had other forms of income to fall back on. One factor which may harm many gambler’s applications is providing proof of income. So, there are various circumstances where gambling can present issues for mortgage applicants, and gambling is one of many factors that can affect your mortgage application. Maximize your travel with hands-on travel advice, guides, reviews, deal alerts, and more from The Points Guy. Check out our recommendations so you can travel more often and more comfortably.

1. Mortgage Declined Due To Gambling Losses
2. Mortgage Declined Due To Gambling Rules
3. Mortgage Declined Due To Gambling Winnings
4. Mortgage Declined Due To Gambling Money

Getting a mortgage is never a sure thing, even if you’re the richest individual in the world. And even if you have a perfect 850 FICO score.

There are a ton of underwriting guidelines that must be met to qualify for a home loan, both for the borrower and the property. So even the most creditworthy borrower could still run into roadblocks along the way.

Last week, the Federal Financial Institutions Examination Council (FFIEC) released Home Mortgage Disclosure Act (HMDA) data for 2012.

Though mortgage lending was up a big 38% from 2011, there will still thousands of declined mortgage applications.

In fact, the top mortgage lender in the United States, Wells Fargo, denied 84,687 of the 399,911 home purchase applications it received (21.2% rejection rate), including those that were pre-approved, according to a Marketwatch analysis.

Rejection Rates by Top 10 Mortgage Lenders in 2012 (Purchases)

Reasons Why Lenders Decline Mortgage Applications

• Inadequate credit history
• Lack of affordability due to limited income
• Insufficient job history
• Lack of funds for down payment, closing costs, and reserves
• Issues with the property (as opposed to the borrower)

While the possibilities are endless, I can provide several reasons why a mortgage loan might be declined.

Credit History

Let’s start with credit, which is a biggie. First off, if your credit score isn’t above a certain level, your home loan application might be declined.

While the FHA permits financing with credit scores as low as 500, most individual banks have overlays that call for higher scores. So if your score isn’t say 640, you could be denied.

Even if you credit score is above a key threshold, a lack of credit history could prevent you from obtaining a mortgage. What this means is that those who didn’t open enough credit cards and other loans (student loans, auto loans/leases, etc.) prior to applying for a mortgage could be denied.

Seems unfair to be punished for not using credit, but mortgage lenders need to measure your creditworthiness somehow, and without prior datapoints it can be difficult to impossible to do so.

Staying in the credit realm, what’s on your credit report could hurt you as well. If you have recent mortgage lates, you could be denied for a subsequent mortgage.

The same goes for past short sales, foreclosures, bankruptcies, and so on, though the FHA has recently eased guidelines on that front.

Another credit issue that comes up is when borrowers make the mistake of opening new credit cards or other loans during or just before the mortgage approval process.

Doing so can hurt your credit score and/or increase your total monthly liabilities, which could kill your application in the affordability department.

Affordability and Income

Speaking of affordability, if you don’t make enough money for the mortgage you’re trying to qualify for, you could be denied. Banks have certain DTI ratio maximums that are enforced, and if you exceed them, you’ll be declined.

So attempting to borrow more than you can afford can easily lead to a denied app.

Where that income comes from is important as well. If you’ve only been at the same job for a few months, or less than two years, you’ll have some explaining to do.

Underwriters want to know that your income is steady and expected to be maintained in the future. If you just started a new job, who knows if you’ll last.

The same is true about sharp fluctuations in income – if your income all of a sudden shoots up, the underwriter might not be convinced that you’ll continue to make that amount of money until it’s proven for at least a couple years.

There’s also the odd chance that mortgage rates jump and if you don’t lock in your rate, you could fall out of affordability.

Assets and Down Payment

Another common problem is coming up with the necessary funds to close your loan. Generally, you need both down payment money and reserves for a certain number of months to show lenders you can actually pay your mortgage.

If you aren’t able to come up with the money, you could be denied, especially if there are certain LTV limits that must be met.

And if you try to game the system by depositing money from family or friends in your own account at the last minute, you’ll likely be asked to document that money or risk denial.

Property Issues

As I noted earlier, it’s not just about you. If the property doesn’t appraise, the loan will be put into jeopardy. If it comes in short, you’ll need to bring more money in at closing, and if you don’t have the money, you might need to walk away.

There are also those who try to convince lenders that a property will be a primary residence, when in fact it’s a second home or an investment property. This is a common red flag that often leads to a denial.

For condo or townhouse buyers, there are additional hurdles that involve the HOA and the composition of other owners in the complex. If too many units are non-owner occupied, or the HOA’s finances are in bad shape, your mortgage could be declined.

Even if it’s a single-family home, if there’s something funky going on, like bars on the windows or some kind of weird home-based business, financing might not happen.

There’s also good old-fashioned lying and fraud – if you attempt to pump up your income or job title, and it turns out to be bogus, your application will get declined in a hurry.

If you are denied, it’s not the end of the world. Simply determine what went wrong and look into applying with a different bank, perhaps one with more liberal guidelines. Or ask for an exception.

Of course, you might just need to wait a while if it’s a more serious issue that can only be cured with time, which is certainly sometimes the case.

Condensed List of Reasons Why Mortgages Get Denied

1. Loan amount too big
2. Income too low
3. Inability to document income
4. Using rental income to qualify
5. DTI ratio exceeded
6. Mortgage rates rise and push payments too high
7. Payment shock
8. LTV too high
9. Inability to obtain secondary financing
10. Underwater on mortgage
11. Not enough assets
12. Unable to verify assets
13. No job
14. Job history too limited
15. Changed jobs recently
16. Self-employment issues
17. Using business funds to qualify
18. Limited credit history
19. Credit score too low
20. Spouse’s credit score too low
21. Past delinquencies
22. Past foreclosure, short sale, BK
23. Too much debt
24. Undisclosed liabilities
25. New or closed credit accounts
26. New/changed bank account
27. Credit errors
28. Unpaid tax liens
29. Unpaid alimony or child support
30. Divorce issues
31. No rental history
32. Fraud/lying
33. Undisclosed relationships with seller (non arms-length transaction)
34. Attempting to buy multiple properties
35. Property doesn’t appraise at value
36. Defects with property
37. Home business on property
38. Non-permitted work
39. HOA issues
40. Investor concentration in complex too high
41. One entity owns too many units in complex
42. Title issues
43. Lender overlays
44. You own too many properties
45. Co-signer for other loans
46. Property not really owner-occupied
47. Layered risk (lots of questionable things added up)
48. Incomplete application
49. Inability to verify key information
50. Plain old mistakes

(photo: recoverling)

Summer is upon us!! Windy, rainy and sunny all in the same day. Then it rains for a week and the new builds are all out of schedule for an extra month! Nail biting stuff!

It’s fair to say that the weather is busy and so is the home loan/mortgage market at this time of year, so its timely we talk about why banks decline or defer mortgage applications.
Usually if you have a good deposit (20% residential & 40% Investment) you can afford it and you have good account conduct you are good to go.

We have accumulated our most common reasons (that we see) why banks decline a mortgage application, this gives you some idea of what we, and the banks, are looking at when approving home loan finance. As you will see the reasons are varied and numerous, the banks have tightened up on what they will approve, we’ll go more into the banks Responsible Lending Code in the next blog.

Mortgage Declined Due To Gambling Losses

1. Collections lodged with Veda Advantage (Baycorp)

When a debt is not paid on time, the first sign of trouble is the establishment i.e. bank or finance company, sends the payment arrears to their in-house collections department, if the arrears are not sorted out or an arrangement can’t be made then the establishment sends the debt to an outside agency to take on the task of debt recovery. The final destination of the bad debt is lodged with a company called Veda Advantage (for a long time it was Baycorp). Once a debt is lodged with Veda Advantage it’s on your record for 5 years regardless, even if you paid the debt immediately. Usually, if the debt lodged is under $400 and is paid off, the banks are ok with this. Anything over $400 needs to be paid and two years must pass before the banks will look to approve. If you have any outstanding collections lodged with Veda Advantage the banks will decline. Bankrupts also show up on Veda Advantage, the banks cannot lend to anyone declared bankrupt for seven years or until they are discharged full stop.

2. Servicing/ low income/ too many other debts

Income is one of the main things that impact an approval. This is what the banks call “Debt Servicing”, in other words can you afford to repay the loan the banks approve. Often, we see clients with a good level of income but have other debts which effectively eat up surplus cash, the bank and WealthHealth don’t want to see you purchase a home then lose it because you can’t afford it. The main culprits which can affect your servicing ability are things like, car loans, GE, GEM Visa, Q Card and multiple bank credit cards. The trick here is to be patient and save rather than get things on credit (boring eh) but the extra debts could delay a home purchase up to 5 – 7 years once you stop spending and decide to pay things back.

3. Unsatisfactory account conduct (transaction account)

Account conduct is showing the bank that you can manage your finances and day to day living costs without getting into trouble. Account conduct issues that hamper approval are going into overdraft without an approved overdraft limit, being in overdraft with an approved limit and never going into credit, reversed payments (dishonour or honour fees) or concerning spending habits, i.e. numerous cash withdrawals on daily basis that could indicate a gambling addiction…trust me the banks pick this up.

4. No deposit/Low deposit

The Reserve Bank of NZ has tightened up its deposit requirements recently to try and slow down New Zealand’s property market and to boost inflation. They first applied higher deposit requirements in Auckland but this has now been applied to the rest of the country.
Minimum 10% is needed to make a purchase, we can’t get finance approved with $0 deposit now but things do change….
First home buyers could possibly get a home loan with 10% deposit, otherwise standard owner occupied require 20% deposit and investments require 40% deposit.
There are ways to get around the 20% and 40% deposit requirements using existing equity in either a parent’s home or an existing properties equity so call us to chat about it.

5. Banks run out of funding (less than 20% deposit)

Banks are now limited to a certain amount of lending they can have on their books that is over 80% lent (low deposit loans) usually its around 10% of their entire mortgage book. When someone has less that a 20% deposit there is a two-stage approval process. Stage one is bank approval (this is usually the easy bit) and stage two, the loan goes to the banks funding team to check if they have funds available to lend for loan over 80% of the property’s value. The funds banks have available changes daily, one day we can pre-approve and the next it could get declined. If a deal is declined due to “No Funding Availability”, we would have to reapply from the beginning to the same bank OR apply to another bank.

Mortgage Declined Due To Gambling Rules

6. No genuine savings

This applies to low deposit loans, the main reasons banks like to see savings is that one, they can see you have good financial knowledge and two they can see you’ll be able to handle the jump from rent to mortgage payments as you are paying rent and saving at the same time.

7. Self-employed less than 12 months

We can usually get loans approved if you have been self-employed for less than 12 months depending on how tight the bank’s get, a bit of info is usually required:
• 12 Months cashflow projections (prepared by an accountant)
• Year to date financial figures (prepared by an accountant)
• Year to date GST returns (if applicable)
• Business Plan

8. Bankruptcy

We can look at options for you once you have been discharged bankrupt so talk to us.

9. Property location

Mortgage Declined Due To Gambling Winnings

If you are wanting to purchase property in the middle of nowhere then talk to us first as the banks have different deposit requirement for Rural, Farms and Lifestyle properties.

Mortgage Declined Due To Gambling Money

Phew, you still there?! We know that was a biggie and hopefully you are now armed with some useful knowledge for when you want to apply for a mortgage!