Denied! What Now?
When your mortgage loan application is denied, you may feel like throwing
in the towel. Yet there are a number of reasons your loan may
have been denied, and it may also mean that the loan was not the
right one for your situation. There are some things you can do
when your loan is denied that will help you find the right loan
for you.
First, you need to find out why you were denied. This will help
you plan your approach to resolving your home buying situation
and finding the right loan. Your mortgage lender has 30 days to
send you their reasoning, in writing, explaining why you were
denied for a mortgage loan. The notice will give you a reason
for the denial along with a federal agency that you can contact
if you think you have been illegally discriminated against.
Though you may have been turned down for a mortgage this time,
most often the reason for the denial can be fixed. Take a close
look at the lender’s reasoning to determine your next step. Were
you denied for bad credit? How about insufficient down payment?
Excessive debt? All of these things can be fixed with time and
effort.
If
you have bad credit and your loan application was denied, then
begin making strides to fix your credit. Start paying your bills
on time, every time, and maybe even participate in credit
counseling. You can even try a snowball debt reduction method
that helps you reduce your debt quickly and also helps you build
your credit rating again. However, if you feel there is an error
in your credit report, you need to contact the credit reporting
agency immediately to get it resolved.
Another option for you should your home loan application be
denied is to ask for a second opinion. Many banks have a
secondary level of review that makes sure all of the information
was looked at properly. If your loan application is turned down
you can request that your application be reviewed at that level.
Finally, keep looking around. Just because one bank turns you
down, another bank may welcome you with open arms. Not all banks
have the same criteria for mortgage loans, so one bank may put
an emphasis on down payments and points while another bank may
put an emphasis on credit rating. Explore your options with
other lenders.
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