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    What to Do if Your Loan Application is Denied?

    December 8, 2017 By Chris Hamler

    Getting turned down on your mortgage application is no reason to give up. Ask yourself the right questions and see where it went wrong. There are steps to take than might help you finally get a nod on your next try.

    It’s easy to lose your spirit after your mortgage application gets turned down once. That doesn’t mean you should. If you get denied, the wise thing to do is ask why you didn’t get it in the first place. Is there anything you can do to make it right and get the loan after another shot?

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    Step 1: Identify the why.

    Finding out why you got turned down requires no major effort. Under the Equal Credit Opportunity Act, lenders are required by law to disclose to the applicants the reason/s for denial. This should be done in writing and given to you within 30 days after turning down your application.

    In this letter, you will find the following vital pieces of information:

    • The specific reason/s for why you got denied
    • How you can take action to mend such issues
    • Name and address of the credit reporting agency if the reason for your denial involved a credit report
    • The lender’s contact numbers which you can use if you don’t understand the content of the report
    • Contact number/s of the federal agencies that you should go to if you believe your application has been treated discriminatorily

    Step 2: Correct your errors.

    There are various possible reasons why your lender said no to your application.

    It could be that you have insufficient income to afford the mortgage payments, don’t have enough cash reserves for the down payment, or have too much debt on your name.

    Another probable cause is a low credit score. Most conventional mortgages require their borrowers to have a minimum credit score of 620.

    Or, another reason is lender error. Though it’s an off chance, these things do happen.

    Whichever got you the lockdown, the important thing is to take action. If you have insufficient income, you can apply for down payment assistance programs or low down payment mortgages that have lenient qualifications and competitive interest rates.

    If your credit score is low, you might want to check your credit report and inspect for errors. Or, you can take some time first and build good credit if you can afford to delay.

    If the error is found to be on the lender’s end, then you’re in luck. Such errors are the easiest to fix. Just forward the necessary documents to correct some underwriting errors.

    Step 3: Get a second opinion.

    After you’ve corrected your errors, it is now time to forward your application for reevaluation. If you have questions, don’t hesitate to ask your lender. Lenders also have a second level of review for loans – something that you might want to consider.

    Step 4: Apply again.

    If, for some reason, your application still got denied after another round of evaluation, the best move is to keep shopping. Mortgage programs today have evolved to cater to a variety of borrower needs so not meeting the standards of one program does not automatically disqualify you in another.

    Before you do that, you should first establish the following facts:

    • What you want in your loan
    • How much can you afford
    • What fees are charged
    • Is it the right time?
    • Are you ready?

    Being honest with yourself and your financial capacity is a crucial factor in getting approved.

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    Filed Under: Non Qualified Mortgages Tagged With: credit, Equal Credit Opportunity Act, lenders, loan application, turned down

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    IMPORTANT MORTGAGE DISCLOSURES:

    When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

    Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

    When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check . Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

    Minimum credit ratings may vary according to lender and mortgage product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee.

    Copyright © Mortgage.info is not a government agency or a lender. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.

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