Why was my mortgage loan
There are many factors why your mortgage application may have been turned down. Lets look at some of the reasons and what you can do to correct them.
Getting a loan denied is a bad experience. It is even worse without a clear reason. Often the lender will be vague as to the reason for denial. If your loan is denied for ANY reason and your not getting the explanation your after then give me a call! I will look at your scenario and explain what I find.
Sometimes, loans get denied due to strict underwriting guidelines for a specific lender. It is a competitive market out there. One lender's denial is another lender's approval. Keep trying. Don't give up if you can keep looking for a loan without having to pay anything.
Once you have been denied it's important to not only identify the reason for the denial, but also take steps to correct the problem. While you may not be able to erase some of you past credit problems, there are still things you can do to improve your score now. First identify and dispute anything listed on your credit that is not accurate. Secondly work on whatever is the largest factor impacting your credit score. For example if you have high balances on your credit scores try to pay down your balances, or request an increase in your high credit. You can also take out a secured credit card to help re-establish a positive payment history. If you work closely with your mortgage professional they can help you get approved for a mortgage, it may just take a little time and work on your part to get there.
Can you make a larger down payment? As little as 5% - 10% down can often show a lender you are serious about your new home and may make the difference between a denial and an approval. If you have saved to make a larger down payment you could use the mean time to work on your credit report and increase your credit scores, greatly improving your chances of an approval.
Once your loan is denied your lender has 30 days to explain in writing why your loan was denied. Whatever you do, don't give up. Talk to your lender about qualifying you for a different mortgage program.
Your loan may be denied because you cannot prove that you have a history of paying your bills on time. For example, you may pay your rent in cash, and have no credit cards and no installment loans.
The main reason a loan is denied is due to credit problems. Low credit scores, missed payments on outstanding debts, slow payments on current bills, bankruptcies, foreclosures, collections, and/or judgments accounts all have a major bearing on whether your loan may be approved or denied. If you have any or all of the above adverse credit items you may not be approved for the loan you are seeking. Having bad credit may be the cause for denial of your loan on one program, but if you try to obtain a mortgage loan on a different program you may be able to be approved. Working with an experienced mortgage loan officer will help to increase your odds of being approved for a mortgage.
There are many reasons that loans are denied. Some of the reasons are derogatory credit and poor mortgage or rental history.
Sometimes loans are denied because of excessive debt. Lenders take into account all of your debt, including home loans, credit cards, car payments and personal loans. As your debt-to-income ratio increases above a certain level, the loan programs you can qualify for will decrease and the interest rate will increase.
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Information listed above is to be used for educational purposes only and is not guaranteed