National mortgage denials are at the lowest levels since the financial crisis. However, Miami leads American cities with the highest rates of mortgage declines.
On a national level, only 9.8% of loan applications were denied in 2018, meaning nearly 1 in 10 mortgage borrowers were rejected during the application process, according to a study from LendingTree, an online lending marketplace.
To determine how many borrowers were successful during the application process, the company analyzed more than 10 million mortgage applications using 2018 data from the federal Home Mortgage Disclosure Act
The study showed mortgage denials are now at the lowest level since the financial crisis and at the lowest since 2004, mostly due to the nation’s low-interest-rate environment that has encouraged an increase in borrowing demand.
Despite the good results the study evidenced nationwide, numbers weren’t that good for Miami. LendingTree concluded that 11.6 percent of all mortgage applications filed in Miami were declined and is the highest rate of denials of any city in the U.S.A.
To make matters worse, these figures are much higher in real life. Miami’s 11.6% corresponds to mortgage loans that lenders deny once under an application process; however, many people—including Hispanic families—don’t even get to that step.
According to William Ledesma, a senior loan officer at PRMG mortgage corporation, 30% to 40% of Hispanics have a pre-interview with the bank before applying and get rejected. There are many reasons why banks turn down people at an early stage, and these include facts like low credit score, debt-to-income ratios, job status change, or even large cash deposits in bank accounts, among others.
“Our recommendation is to never start a mortgage loan application at a large bank without previously consulting experts because most probably you will get rejected. Banks do not handle a loan from beginning to end to understand if you can qualify or not. They don’t understand the small but important factors that our community deals with; if you tell them you have bad credit or work on your own, they will immediately turn you down,” said Ledesma.
The key for homebuyers is to be well-educated on the homebuying and mortgage process. Understanding the key reasons mortgages are denied can help borrowers avoid missteps and compete effectively to secure their dream home. Therefore, people should get advice direct from a local lender who understands the market and the Latino community
“Many of our clients may not qualify today, but next year they will. Many have credit problems, and no one has advised them on how to improve their score. We offer personalized advice, so when they apply for a mortgage loan, the chances of acceptance are high. Depending on the circumstances, we devise a plan to buy in six or eight months or immediately. If we approve a client, a mortgage would never be denied,” concluded William Ledesma
For more information call 786-517-4600, or visit www.williamledesma.com
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