“Extraordinary things are always hiding in places people never think to look“

The quote is by American writer, Jodi Picoult, and was probably not inspired by her experience of qualifying for a mortgage, but it definitely speaks to my topic.  These days mortgage approvals don’t come easy.  For starters, they start off as applications at which time the process of adjudication begins until eventually a decision is made to either; award an approval, request further information and/or clarity, or the most discouraging outcome possible- decline the application outright.  If you have experienced (or are currently experiencing) the latter, I’m writing this post to inform you that there is hope!  
Here is the first of a series of multiple posts focused around the topic of turning declines into approvals. Check in weekly as more tips and strategies will be revealed!

Decline Reason #1: Not enough income

This is probably the most common reason for a decline and likely the easiest one to troubleshoot.  Here are some effective countermeasures that could help you overcome a low qualification income:

• Provide more information!  Have open and exploratory conversations with your mortgage broker – reveal all.  An experienced mortgage broker will catapult your qualification to higher levels due to their knowledge and access to niche qualification programs.  An experienced mortgage broker will request additional (sometimes excessive) documents during the pre-approval stage for the sole purpose of developing an optimal application base to present to lenders.  More information equals more possibilities.  For example, rather than settling for a recent pay stub and an employment letter, a pro-active mortgage broker could further request your most recent 2 years (or even 3 years) of personal income tax documents to scan for patterns, trajectories, or even other unknown sources of income that you were simply unaware of.  The end result is often a higher mortgage qualification amount than if you had simply provided the bare minimum income verification.
• Get a Co-Signer!  Stop feeling ashamed and just ask your parents to co-sign.  I like to use the term “borrowing” a parent for a couple of years.  Almost every adult progresses and improves their earnings with time and there’s no reason to doubt that you will too!  Ask your mortgage broker how much extra income you actually require to qualify and if it’s not that much, you will likely be able to remove your parents from the mortgage (and set them free!) in a year or two.  So go ahead and ask your parents if you can “borrow” them for a couple of years.  By the way, co-signers are not limited to only mom and dad…you could add other family members, friends, or basically anyone with a pulse!  Click Here for more information on Co-Signing.
• Use your net worth to top up your purchasing power!  If you have substantial assets, some lenders will allow you the ability to top up your mortgage qualification amount proportional to the value of your assets.  The assets must be in liquid form (cash savings, investments, etc) and cannot include the down payment proceeds already reserved for the transaction.  Existing real estate equity is not an eligible liquid asset.  For example, let’s say you qualify for a $250,000 mortgage based on your income, but you also have a $300,000 retirement fund.  Under a net worth qualification guideline you could qualify for a $550,000 mortgage even though your income is only able to qualify for $250,000.  Click Here for more information on Networth Mortgage Qualification.
• Check in next week for Decline Reason #2: Ineligible Income