A mortgage rejection can halt the mortgage process. Mortgage rejections occur for various reasons. Instead of getting upset, get to the root of the rejection and take steps to resolve the situation and qualify for a mortgage.
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Request an Explanation
Mortgage lenders reject home loan applications for various reasons. Rather than accept the mortgage loan rejection and cancel all plans to purchase a home, contact the lender or broker and inquire about the reason(s) for rejection. Legitimate reasons, such as a history of late payments or high credit card debt, can contribute to a loan denial, as does credit report errors. Disputing errors and getting your credit report updated can help you get an approval.
Fix Credit History
Understandably, mortgage lenders may not take a risk if you have a low credit score. Just because you can't get a house now doesn't mean you're stuck to a life of renting. Improving your credit score can get you into your own property. Start by paying all your bills on time. Next, tackle your debt and reduce your credit card balances. In the meantime, don't apply for additional credit. Each credit check reduces your score. Increase your score to 680 or higher.
Apply for a Lower Mortgage
Rejections sometimes occur because you can't afford the requested amount. Talk to your mortgage lender or broker about qualifying for a less expensive mortgage. If you're married, use your spouse's income to help you qualify for the home loan. When this isn't an option, postpone buying a home until your income increases.
Some mortgage lenders have tighter guidelines in comparison to other lenders. If you can't get a mortgage approval from one lender, shop around and consider other possibilities. For example, FHA mortgage lenders approve applicants with credit scores as low 620, as well as those with bankruptcies and foreclosures in their past.
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