What can you do if you're mortgage application is denied? Zero in on the necessary steps to take next.
It's never fun to be turned down or denied for a loan. Before you give up and think you won't be able to get credit anywhere, there are some steps you can take. Taking action today will help you become a home owner tomorrow.
Lenders are required by a federal law, The
Equal Credit Opportunity Act, to tell you in writing when you've been
turned down or denied for a mortgage loan this is called a loan denial
Two important pieces of information must be included in the letter you receive when you are denied a mortgage loan:
If you don't understand the reasons given for turning down your application, ask for more information. Sometimes it can be hard to determine exactly why your application was not approved, especially since decisions involve a lot of different factors.
Don't be shy about asking, since the information you receive may help you improve your credit so you can qualify for a loan in the future.
You may be denied for a mortgage loan for various reasons, including not meeting the creditor's minimum income requirement or not being at your address or job for the required amount of time. What can you do if this is the case?
If its the minimum income requirement, look for a lender whose income requirements are not so high. Perhaps that's not possible, then you may need a higher down payment to bring down the amount you need to borrow so you will meet the necessary requirement. Or have a co-borrower's income included. Talk with your mortgage professional to see what you can do to make this work.
Perhaps you were denied a mortgage loan because of insufficient income to afford the house you want or you have insufficient funds for closing costs and a down payment. You could consider loan programs for low to moderate-income borrowers with lower down payment requirements, such as a FHA loan or a VA Loan (if you have served in the military).
What can you do if you haven't been long enough on the job? Take a look at your job history. Were you employed before your current job? Had you improved your situation by taking the job your have now? Be sure to explain all this to your mortgage professional, because you previous employment may also be used to qualify you.
Maybe you requested a loan amount that is larger than 95% of the appraised property value. If that is the case, the chances are you will be denied a mortgage loan. This is what you can do if that happens:
If you are denied a mortgage loan because of a poor credit report, you are entitled to a free copy of that report. You must request it within 60 days, so don't wait to order it. Read your report carefully to make sure it is accurate and complete.
What should you do if you find mistakes? If you believe that these mistakes on your report led to the rejection of your application, you can ask the credit bureau to send a corrected copy to the lender. Follow up with the lender to find out if your application can be re-evaluated.
Finally, you can try again. All lenders have different approval standards. Just because you did not get a loan from one financial institution doesn't mean you can't get one somewhere else. Try again with another company. Your mortgage professional should be able to help you shop the loan. Is there a limit on how many times you can apply?
Try not to apply more than five times in a six month time period. Otherwise that can affect your credit score.
Never consider it over if you are denied a mortgage loan! There are things that can be done so you can get that dream house. So don't give up easily. Find a mortgage professional who is willing to work with you.
Learn about the Best FHA Home Loans that are specially designed for first time home buyers with not so perfect credit.
Picking the right company who can help you find the program that will suit your special needs can be hard. Choosing a Mortgage Company will help you fill that need.
How to do Credit Repair Yourself will give you all the tools and tips you need to tackle this project.
Have a Question is a great place to ask all those questions you are wondering about. So there you go, you have someone who knows the business to guide you.
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