Mortgage Red flags

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When applying for a loan there are some red flags which you should avoid at all possible cost. When the lender sees these signs, it will make them nervous and might even disqualify you from the loan.
1. Low Credit score: A Low credit score will not only increase your rates but if it is too low then you will not qualify for the loan at all. A Low credit score means that your credit history is poor
2. Large deductions: Large deductions on your taxes may be cause for concern for the lender. Deductions annualized and taken from your monthly income, lowering your DTI. If you have too many deductions, then it might push your DTI beyond the acceptable thresholds.
3. Deferred student loans: Per underwriting guidelines, if a student loan is deferred, then 2% of the principal is added to the monthly liabilities for debt to ratio calculations.
4. Large deposits: If there are large amounts of money constantly being moved from accounts to undisclosed then the lender becomes concerned. Funds need to be sourced and if they are not, then they can not be used. This is particularly bad when the borrower needs to bring in money to pay off the remainder of the loan.
5. High LTV: High loan to value ratios are bad for the borrower. A high loan to value is much riskier and causes rates to increase. With a high loan to value, it’s also more difficult to qualify for a loan.
6. High DTI ratio: If the debt to income ratio is too high, then the borrower will not qualify for the loan. The Debt to income ratio for the month may not exceed 50% or the borrower will be disqualified.

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