Mortgage: Look beyond your credit score

July 11, 2011 2:03:32 PM PDT
For Gary Frisch and his fiancée Christina Daniels, the moment they saw this house, they knew they wanted it. But the buying process became a love-hate relationship.

A week before his closing, Frisch found out his mortgage was denied. Even though he put 20-percent down and had a top-notch credit score.

"My credit was exceptional," Frisch said. "It was over 800 according to one of the reporting bureaus and high 700s according to the others. So, my credit was not an issue at all."

But Frisch had started his own business in 2007, and initially, his income took a hit. Finally last year, his business started to pay off and he had a big jump in income. But that extra money coming in didn't mean approval.

"The reason I was told by my realtor why I was declined was I had too big of a disparity between my 2009 and my 2010 income," Frisch said.

5 years ago, that may have not been a problem, but these days, it's a red flag.

In the last few years lenders have been tightening their lending standards. In fact, today nearly a quarter of all mortgage applications are denied.

But the story ends well for Frisch and Christina. He found another lender that got him into a loan and the couple into a new home-- with a new understanding of the credit world.