possible towards their property purchase. It is also in the lender’s best interest because the more cash upfront, the less risk the lender takes on by giving the borrower a mortgage. There are red flags in down payments. For example, if a borrower is handing over a large down payment but has a low income, the lender will wonder where the money came from and whether or not the borrower falsified some of their loan application information. Another obvious red flag is if a person is buying an expensive property with only a small down payment. This usually means that the borrower is bad at saving money and is making a poor financial decision and will end up not being able to afford the mortgage. The best down payments are those that match well with the borrower’s income and prove that they have been planning for this property purchase ahead of time.
COLLECTIONS
When a person does not pay their debt, most lenders will push the debt collection responsibility to a third-party company. This is called collections. When a collections agency is hired to collect a debt from a person, that information hits their credit report and public record. Contrary to popular belief, a borrower in collections isn’t automatically refused a mortgage. Collections hurts your credit score overall, and that lowered score may affect your loan prospects. However, if you have a strong credit report (over 720, usually) even with a collections case, your chances of getting a loan are still good. However, it is still a red flag.
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