Buying a home isn’t always a painless process – it takes a lot of work. For some, it’s making multiple offers on a home and being outbid. For others, it’s being rejected for a home loan. If you find yourself in the latter position, don’t worry. Take these steps to ensure you get approved for a mortgage loan the next time around.
Rejected for a Home Loan? Next Steps
First off, if you’ve been denied for a home mortgage loan, ask the lender why they denied your application. You will receive a denial letter that explains the reasons that a particular lender did not accept your application. If the letter doesn’t satisfy your question, you could ask the lending agent you worked with for a more specific answer.
Home Loans & Credit
Mortgage rates are based on your credit history and credit reports, because lenders want to know how much risk each applicant carries. Someone with a low credit score or a less than stellar credit history is a higher risk. If your credit score is low, take steps to improve it. Every on-time payment you make helps improve your credit history.
The best advice to improve your score is to pull your credit reports, check for inaccuracies and work on fixing those through the credit reporting agencies. If you have unpaid credit card balances or outstanding debts, try paying off some of your debt and see if that gives you the bump in credit score you need.
There’s no sure-fire way to improve a credit score in a short amount of time. It’s going to take some work! It also will probably take longer than you hope it would, but stay patient. If you are thinking of seeking out a credit repair company, think again. Negative information that is accurate on your credit report will stay on there for 7 years. Instead, focus on these 10 tips to improve credit scores.
Take a Home Buyers Course
In addition to improving your credit, consider taking a home buyers class. Many courses are available online and provide useful information, advice and budgeting tips for purchasing a new home. And, taking the course may even save the home buyer money.
Some other options to ensure you obtain a home loan involve adjusting your proposal. For one, try lowering the amount of the loan you are seeking. Likewise, see if you qualify for the mortgage loan at a different interest rate. Another option is to seek out a different lender. Finally, keep saving up a down payment to make your financing look even better.
If you’ve been rejected for a home loan and are working towards a solution, breaking down the intimidating barriers of the mortgage process can really help. With that said, brushing up on the lingo to better understand mortgage terms is another way to better prepare yourself for successfully obtaining a mortgage loan.