Handling Rejection When your Mortgage Application is Denied
Posted on May 15th, 2014 by Underwood Mortgage Group
Following the crash of the housing market a few years back, lenders have become especially critical about who they lend to. Keep this in mind if your application has been recently denied. The best course of action is to get answers as to why your application was not approved, and use this information to submit new applications.
Federal law dictates that, as long as you have submitted a written application, you be given a written explanation, called an adverse action notice. Reasons that mortgage applications are denied include a loan amount that is too high in relation to the appraised value of the property, a debt load that is too high, or a credit history that is not desirable.
Once you are aware of the reason or reasons for denial, commit to fixing these issues before you start the mortgage application process once again. It’s important to know, too, that while you may not have qualified for a particular mortgage product, there may be other products better suited to your situation; for example one that costs less or requires you to come in with a higher down payment.
Another path to take might be to approach the same lender with the same application, with a try at government programs, such as FHA, VA for veterans, and Rural Development Housing Loans.
If the problem is high debt-to-income ratio, be diligent about paying down debts. This may take time, and will require some personal sacrifice and discipline. Create a payment schedule for yourself, and work the plan closely.
When all is said and done, know that a rejection does not affect your credit score, so long as you don’t make too many written applications too frequently. Becoming a homeowner is a monumental achievement in one’s lifetime. Learn about the process, keep improving your financial picture, follow your credit reports closely, and look forward to landing eventual mortgage approval.
For information about homes, lots, and condos for sale Orange County, plase contact Rick Underwood, 714.203.8555.
Posted in Real Estate Advice