30% of Buyers Denied, Give Up Getting Mortgage

Credit has gotten tighter, and more buyers are being left out or becoming so frustrated they’re giving up. More than 2 million people were turned down for mortgages last year, according to the Federal Financial Institutions Examination Council. About 30 percent of buyers are either denied a mortgage or drop out of the application process, the Mortgage Bankers Association estimates, with stringent lender requirements or incomplete applications most at blame. The New York Times notes some of the biggest reasons for rejection are buyers coming with insufficient income, bad credit (applicants with FICO scores below 620 are usually rejected, although some lenders are rejecting anyone below 660); and low appraisals. What’s more, lenders usually want a two-year history of income so applicants who have changed jobs recently may face hurdles. “It’s common to get turned down if you have a gap in employment history over the last two years,” Erin Lantz, the director of the Zillow Mortgage Marketplace, told The New York Times. Source: “Triggers for Rejection,” The New York Times (Oct. 6, 2011)