Rejections can be very painful. This is also true when you get denied a mortgage loan.
It can be infuriating and frustrating that after the tedious application process and the waiting period that seemed like forever, you only get a piece of paper telling you that the application was declined.
The block text printed in red saying ‘LOAN DENIED’ is hard to miss!
It’s difficult to move on from a loan denial. Your hopes and dreams and hard work seemed to have been thrown out the window. Then, you will never want to try again. You’d simply give up.
But, honestly, you just can’t give up. Giving up means saying goodbye to your homeownership dreams forever. Giving up means renting out a place your whole life that you can never call truly your own.
You just have to try one more time; now tougher and wiser. You can revisit your denied loan application so you can prepare for your next move. While there is no sure-fire way to get a loan straight away, there are things you can do to increase your chances of getting approved.
Identifying the Problem
Lender does not decline your application without a reason. Remember that they need a borrower to keep their business thriving. So, letting you go for no apparent reason at all just doesn’t make sense.
What you have to do now is to identify the reason for the loan denial. Once you know this, it is easier to deal with the problem. Instead of going back to square one which will take more time and resources, focus your energy on the error/s and start correcting them.
“How do I do this?”
By examining your application.
“But, it sounds like its a lot of work.”
It sounds like looking for a needle in a haystack, but it actually isn’t that complicated.
The law requires that mortgage providers, may it be a bank or a lending company, provide you with the reason/s why your mortgage application was declined. A written letter stating these reasons will be mailed to you within 30 days after the loan denial.
Now that the lenders have laid down the ‘areas of improvement.’ You can now make a concrete action plan to address the concern.Find the best mortgage rates, click here.
Build Your Credit
Poor credit score and/or insufficient credit history are the most common causes of a loan denial.
Based on your credit score and credit history, lenders will determine if you should be approved for a mortgage or not. Of course, there are other factors that a lender takes into account. However, your credit score is one of the most crucial things to make or break your application.
An insufficient credit will also be a possible ground for a loan denial. This means that the lender isn’t able to find enough proof that you can deal with a bigger financial responsibility in the form of a mortgage.
To increase your chances of loan approval, build your credit. Apply for a secured credit card. If you can’t qualify for your own card, have yourself authorized to be the user of someone else’s credit card. If you’re paying rent, you can get credit for that as well. Simply, you need to borrow money and pay it responsibly.
This is also who you can improve your credit score. If you keep your credit in control, maintain a healthy balance of your income and debts and make consistent, on-time and full payments toward your debts you will be to build your credit rating.Connect with a lender, click here.
Scrub Out Any Erroneous Entries, Correct Your Mistakes
A lender will look at your credit report. It will show how you have been dealing with your debts. They will see in the report the payment inconsistencies and overdue bills. This may include, erroneous entries on your report.
Make sure that your credit report is free from any mistaken entries because this will greatly affect your mortgage application. If you see fraudulent collections, inaccurate accounting or any illicit transactions done under your name, correct it right away. Call your credit card or lending company to investigate these matters and have them scrubbed out.
For inconsistencies like overdue payments or delinquent loans in the past, make sure you are taking the necessary actions to correct them. For extenuating situations, you may have to provide the lender a legal written explanation on why it happened and how this has affected your ability to keep up with your dues.
Try a Different Lender
If one lender has denied you of a loan, this does not mean that all lenders will do the same.
There is no harm in giving a different lender a try. Talk to different lenders. They are experts on this matter. Their advice can set you on track. Some lenders will even offer to reevaluate your application.
Different lenders will be able to present a variety of loan options. This way you will be able to find a lender that offers favorable terms and reasonable rates and won’t decline your application. Just keep searching and trying until you find the right one.
A loan denial is not the end of your aspirations for homeownership. There’s still life after a lender has declined your first application. You just have to try and try again and learn from each rejection. In time, you will be able to get a mortgage that is right for you.Click to See the Latest Mortgage Rates»