Being denied for a mortgage can bring your home ownership dreams to a grinding halt. It’s disappointing to first get a denial, and then to deal with the fact that you won’t be able to purchase a home at the moment.
So many of my clients have been down this exact road. But before you give up, you should know that a ‘no’ isn't really a ‘no’, it's just a ‘not right now’.
So let's explore how you can take that ‘no’ and turn it into a resounding ‘yes’ and get the home you know you deserve.
Why You Got Denied a Mortgage Loan
There are lots of reasons why your mortgage application could have been denied:
- High debt-to-income ratio
- Poor credit
- Poor job history
- Self-employed for under 2 years
- Income isn't well-documented
Figuring out exactly why you got turned down can help you prepare for the steps to take to turn that ‘no’ into a ‘yes’ in the future. Have a chat with your lender to find out specifically, why you were turned down for a home loan. As a realtor for over a decade, I’ve left a list of the popular reasons why some of my clients were turned down for loan.
Refinance Your High-Interest Debt
High-interest payments can kill your finances. You feel like you're paying and paying on a debt, but really you're barely chipping away at the principal because interest payments of taking over.
Refinancing your high-interest debt can help you satisfy that debt faster because you're not paying as much on interest. Rather, you can put more of your hard-earned money toward the principal.
And once you eliminate that debt, you're one step closer to owning your dream home!
Raise Your Credit Score
There are lots of ways you can raise your credit score, especially now that the UltraFICO score is about to become a reality. (I recently wrote some information on the UltraFICO score, so you can head there for more information).
Paying down existing debts, not opening new lines of credit, paying your bills on time, and not allowing lenders to look into your credit can all raise your credit score. Also, make sure you're not maxing out your credit cards and not overdrawing on your bank accounts.
Reach Out to Other Lenders
Just because one lender said no does not mean they all will. It's important you shop around for lenders and look at their mortgage requirements prior to applying. Some lenders specialize in helping home buyers with little or poor credit. For example, an FHA loan requires a credit score of only 580.
Do your homework, shop around, and eventually, you'll connect with the right lender that's willing to help you achieve your dreams.
What to Do Next
Buying a home can be an exciting time for anyone, whether it's your first home or your fifth. The important thing is not to get too easily discouraged. Remember, a ‘no’ isn't a ‘no’, it's just a ‘not right now’.
If you’re need help CRUSHING your Homeownership Goals, schedule a chat with us to review your reports and the denial letter from your lender so that we can begin putting together an Action Plan to Claim the Keys to Your New Home!