The number one fear of a first-time
home buyer is being turned down for a mortgage. It's
perfectly normal to worry about rejection, but the chances of it
happening are low. The popularity of preapprovals and the various
ways lenders can adjust loan terms have lowered rejection rates for
borrowers.
Some borrowers will get denied for a
mortgage. If you are, you should:
1. Find out why
Your lender has 30 days from the date
of your mortgage application to explain in writing why your loan was
denied. This explanation is called an adverse action notice. It must
state a specific reason for the denial. It will also tell you what
federal agency you should contact if you feel as if you are a victim
of discrimination.
The most common reasons for denial
are easily corrected give a little time. They are:
-insufficient down payment
amount -excessive debt -poor credit history
You can always reapply for a mortgage
once you have saved more money, paid down your outstanding debts or
raised your credit score by paying your bills on time.
2. Request a second
opinion
Many lenders offer a second level of
review for mortgage loans. This gives you an opportunity to plead
your case. You may qualify if you can convince the secondary loan
reviewer that your credit history was affected by circumstances out
of your control, such as unexpected hospital bills or identity
theft.
3. Keep trying
Just because you are rejected by one
lender, doesn't mean that no one will approve your mortgage. Banks
and mortgage lenders have different underwriting standards. There is
a good chance that you will find one that is right for your
financial status.
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