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Top 3 Ways to Get Turned Down for a Mortgage

1. Pay your bills with cash. Cash is king...unless you want to qualify for a mortgage. Lenders want to see that you have a record of paying your bills on time. Unless they have statements or cancelled checks to verify, there is no way to do so with cash. Especially in the case of paying rent, pay with either check or money order. It has to be a form of currency where you have a copy of the payment itself. A receipt after the fact won't do it. In most cases, the lender will want to see a 12 month history of on time payments.

2. Don't clean up your credit before applying for a loan. While a single 30 day late might not get you turned down, frequent late payments, collections, judgement and liens will get your disqualified 100% of the time. The bank does not care that it was not your fault or that it was a clerical error. You have to get those items resolved and removed from your credit report before applying for a loan. You can view your credit report for free once every 12 months at annualcreditreport.com. You can dispute any incorrect information and have it removed from your report. This process takes a few months, so do not wait until you are out house shopping to address your credit.

3. Have no credit history. Along the same lines as cash not being king, you need a good credit score to get a loan. You cannot do that without credit. It is not hard to establish a credit history, but it does take several months to do so. Open a few credit lines and only use up to 10% of the available credit balance. Be sure to pay your bills on time.


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