It will be much harder to Invest in Real Estate property if your mortgage loan application is denied. It can be frustrating to find out that the banks won’t loan you the money you need after you have done your research and saved for your down payment. Sometimes the lender will tell you exactly why they turned you down. Other times, the explanations might be vague or not helpful. These are the most common reasons that loans are declined. If you want to increase your chances of being approved, you should consider these three factors.

1. Overall, Poor Credit

Imagine a board meeting in the bank’s backroom, where they hand-write loan applications. All things are in the hands of computers these days, even your future as a real estate investor. The process isn’t personal, and you won’t be able to offer your opinion on the future of your real estate investments. Automated software is used by most lenders to determine whether your mortgage loan will get approved. The loan officer simply enters the relevant information, and the software will give you an answer. It’s not quite like that, but it’s close enough! There may be many reasons your credit score is not up to par. A friendly loan officer can help you if you are denied because of poor credit. You can tell them that you have been denied in the past and that you are determined to avoid it happening again. Many loan officers will be happy to meet with you to review your credit history from the perspective of a lender. They make money by lending money and not when you are declined for a loan.

2. Insufficient Income Documentation

Today, money laundering is a common practice. They want to ensure that they only lend to tax-paying, honest citizens who have earned their money legally. You may not be approved for a mortgage if your income records aren’t perfect, and you have money from other sources. Lenders will need to verify your income to be certain you have enough money to pay the mortgage payments. However, they must also legal proof that it came from legal sources.

Keep detailed records of all income during the period leading up to your next mortgage loan application. The gig economy is what we live in. It doesn’t really matter if your sources are legitimate. It doesn’t matter if the source of the income can be verified or traced back. How do you do that? You can balance your bank statements each month (honestly you should be doing so), file your taxes on time, and, most importantly, get the tax IDs for everyone who pays you. This is especially important if you are receiving 1099 income. Don’t accept pay that is not on the books and expect to be able to claim it as income.

3. It’s Not You, It’s The Property

Sometimes a problem with your property could result in you being denied for a loan. Most cases of denial are property-related. The appraisal was too low, and the lender will not lend at the seller’s asking prices.

This is not the worst news you could hear. Sometimes, property appraisals can be inaccurate. It is possible to ask for another appraisal from the same lender. You can also shop around for loans to other lenders if that fails. Multiple credit inquiries within a short time period won’t affect your loan approval outlook. Lenders are aware that you might be looking around. If all else fails, you can communicate your concerns to the seller to ask if they are able to lower the appraised value. It can be hard to accept a loan denial as a personal judgment against you. It doesn’t have to be that way. These are mostly automated decisions that are based on complex algorithms. Don’t lose heart. Do not give up on your dream of becoming a successful Real Estate Investor because you were denied a loan. Get in touch with a loan officer to improve your credit score, keep detailed records, and never take no for an answer.