How to Get a Mortgage Loan After a Mortgage Rejection?
An increasing number of prospective homeowners have found their hopes
and dreams dashed when their mortgage applications are rejected. In
light of the housing and real estate crisis, more and more lenders are
taking a second look at mortgage applications and as a result the number
of mortgage rejections is on the rise. Even if you are among those who have been
turned down for a mortgage loan, that does not necessarily mean you
cannot get a mortgage.
Find out the Reasons Why Loan Application was Rejected
Always take the time to find out why your application for a home loan
was initially rejected. As a result of the Equal Credit Opportunities
Act, lenders are required to provide loan applicants with specific
reasons, in writing, why their loan application was rejected. This
information must be provided to you within 30 days of the lender
reaching a decision. If you discover the problem is due to your credit,
the lender must also provide you with the name as well as address of the
credit agency providing the information.
It is also a good idea to speak with the loan officer that made the
decision about your application. This can sometimes provide you with
critical information regarding whether or not you were close to being
approved. Perhaps you were within just a few points of the credit score
threshold to receiving a loan approval. If the difference was quite
small you might still find a way to receive approval, perhaps through a
different home appraisal or an increased down payment.
Look for Another Lender
Shopping around for another lender (get
multiple offers from multiple lenders here!) can also help you to get approval for
the loan you need. An online network or a mortgage broker can be a good
source, especially if you have credit difficulties. There may well be
alternative loans or mortgage products available that can assist you.
Such products are often ideal for consumers with challenging credit
situations because the requirements are less stringent for approval.
Persistence is oftentimes the key in trying to purchase a home in
today's economy. Some borrowers have found they were able to get a
mortgage approval after trying again with a different lender. In some
cases time can also be on your side. Depending on the reason why you
were rejected for a mortgage loan you may find you can be approved after
paying down some debt and/or saving up more money for a larger down
Applying a Loan with Credit Union
While you might have heard that it is almost impossible to get a loan
today, there is still quite a bit of activity in the mortgage industry
and there are lenders with money available to loan. For instance, you
might find more success by applying for a loan with a credit union.
Credit unions oftentimes offer better loan options for members who have
been with them for a long time. Also, if you have a longstanding
relationship with a credit union, they may be more willing to modify the
terms of a loan to suit your specific needs and situation.
Reevaluate your Loan Amount
It is also a good idea to take a realistic look at how much home you are
trying to buy. For first-time homebuyers, one of the most common
mistakes is to try to purchase more home than they can afford given
their current income levels. As a first-time home buyer, it simply may
not be possible at the current time to buy your dream home. Instead,
consider scaling back some and purchasing a starter home that costs
less. It might not have all of the features you want but it will allow
you to stop throwing away money on rent and start a solid investment by
Clean up your Credit Score
For consumers with credit problems, it is definitely worth it to spend
some time cleaning up your credit score. If you have negative marks on
your credit report, be prepared to establish at least twelve months of
good credit. Work on paying down credit card balances and above all,
make sure you pay your bills on time. Check your credit report and
correct any errors that may be present (Read
Tips to improve your credit score). You are entitled to receive a
free copy of your credit report from each of the three major credit
reporting bureaus once per year.
If you have tried everything and nothing seems to be working, you may
wish to consider asking a friend or a relative with a strong credit
history to act as a co-signer on the loan for you. While not ideal, this
could be an option that will allow you to achieve your goal of
purchasing a home.