Hearing or reading the words, “your mortgage application is denied” can be incredibly devastating. However, you need to remember that it does not mean that you will never get your mortgage loan approved, it just means you’ll have to work a little harder to get it.
Being rejected by your lender is not the end of the line. There are still a few things to be done to improve your chances and move forward.
How to Move Forward
The first step is to find out the reason why your bank did not approve you. The process of approving your mortgage application is a rigorous one, to say the least. There are many things that are considered when a lender is looking at your documents and paperwork to determine if you qualify or not. Whether you are handling it yourself or through a broker, the process is the same. However, if you are working with a broker, he should be able to identify the areas that may cause you problems down the road. These can be seen as the primary indicators of complications down the road.
The lender has to share the reasons why your application was not approved, so the borrower can be able to use that information, identify the problem and attempt to fix it and re-apply at a later time with a much better financial footing.
One of the most common causes of mortgage denial is your credit score. This is a quintessential aspect as it determines the types of loans and the rates the borrower qualifies for. You need to sweep your credit records with a comb in order to find any possible errors that could cause you problems. Is always important that you become familiar with your credit score.
If you are denied approval because of your credit score it does not mean you will never be able to get one, sometimes all it takes is to go to another lender. Having a strong credit score does not mean you will immediately get approved, banks will look for other things like credit card bills, car payments, and even your student loans and make a comparison between how much you make and how much you pay in debts. This is called DTI “debt-to-income ratio” another key aspect all lenders consider for approval or denial.
If at first, you don’t succeed, don’t despair. You don’t quit buying clothes or shoes just because the first ones you tried on did not fit. There are mortgage loans for every borrower profile out there, it is only a matter of finding the right fit for you.