Steps to Take After Being Denied a Mortgage
Loan
It's never fun to be turned down for a loan, but before you
think you won't be able to get credit anywhere, there are some
steps you can take.
Lenders are required by a federal law, The Equal Credit Opportunity
Act, to tell you in writing when you've been turned down for
credit. Two important pieces of information must be included
in the letter you receive when you are denied credit:
- The specific reasons why you were denied credit (or information
on how to obtain those reasons); and
- If a credit report
was used in making that decision, the name and address
of the credit reporting agency that supplied it.
- If you don't
understand the reasons given for turning down your application,
ask for more information. Sometimes
it can be hard to determine exactly why your application
was not approved,
because these decisions involve a lot of different
factors. Don't be shy about asking, though, since the information
you receive may help you improve your credit so you
can qualify
in the future.
You may be denied credit for various reasons, including not
meeting the creditor's minimum income requirement or not being
at your address or job for the required amount of time.
If your loan application was rejected because of insufficient
income to afford the house you want or you have insufficient
funds for closing costs and a down payment, you could consider
loan programs for low- to moderate-income borrowers with lower
down payment requirements, such as an FHA loan or VA loan.
If you requested the loan amount which is larger than 95 percent
of the appraised property value, the chances are that loan
will be denied. In this situation:
- You can try re-negotiate with the seller for the purchase
price to lower the loan amount
- Make an additional down
payment to cover the difference between the appraised
value and purchase price
- If you think the appraiser
undervalued the property suggest that the lender re-examine
the appraisal
- If your loan is turned down because of
a poor credit report, you are entitled to a free copy
of that
report. You must request
it within 60 days, so don't wait to order it.
Read your report carefully to make sure it is accurate
and complete.
Once you have a copy of your credit report, you should check
for errors and fix any errors by disputing them with the credit
report agency. If you believe that mistakes on your report
led to the rejection of your application, you can ask the credit
bureau to send a corrected copy to the lender. Follow up with
the lender to find out if your application can be reevaluated.
Finally, you can try again. All lenders
have different approval standards. Just because you didn’t
get a loan from one financial institution doesn't mean you
can't get one somewhere
else. Try again with another company. Just don't apply for
more than four or five loans in a six-month period.
Apply today to
let MortgageYa Home Loan Center help you get the great
financing you want
and deserve!
