Rejected Mortgage Application: What to Do After
While a home loan rejection can be disappointing, this does not necessarily mean that you’ll never be able to buy a home. For the most part, it means that you are not eligible for a mortgage at the current time. The good news is there are plenty of things you can do to become an attractive borrower, and then move forward to becoming a homeowner.
The first thing you should do is know the reason for the rejection. Banks and lending companies usually provide an explanation to help you address the issues. It could be due to your debt load, credit score, work history, or low down payment.
Understanding why you got rejected can help you the next time you apply. Mortgage firms in Lake Oswego like the Primary Residential Mortgage, Inc. share a few things you can do after being denied.
Ask for another loan type.
Each type of mortgage has its own set of lending requirements. Learn more about the different types of mortgages to identify the one that suits you best. If you do not qualify for a certain loan, ask your lender about an alternative. Talk to a reliable lender, so you can explore different mortgage options better.
Consult another lender.
Being denied by one lender does not mean that others will do the same. Not every bank or company adheres to the same guidelines, as some of them are flexible. Several lenders will ask their clients to pay off a portion of their debts first, while others will allow a bigger debt-to-income ratio (as much as 43%).
Review and improve your credit score.
Checking your credit score is important when applying for a loan. Request for a credit report and make sure that there are no unresolved errors. If you have a low score, try to improve it by paying off some of your debts and keeping your credit balance low.
A mortgage rejection may be negative, but this will give you enough time to make yourself an attractive borrower. You could improve your credit worthiness, save for a down payment, or add more money to your savings account.