We know how frustrating and disheartening having your mortgage application denied can be. We are ready to guide you through the mortgage application process and improve your chances.
Having a mortgage enables you to keep your cash reserves, purchase a home without cash and enjoy cost-effective borrowing. However, just like any other loan application, a mortgage application can be declined. And this introduces today’s question: what should you do when your home loan application gets denied? Here’s what to do — courtesy of mortgage experts here at Sean Zalmanoff.
Why Mortgage Applications Get Rejected
Some of the reasons that may make your mortgage lender reject your mortgage application include a bad credit score, insufficient or unverifiable source of income, high debt to income ratio, and lack of credit history.
Tips for the Second Application Round
While having a rejected mortgage application can be frustrating, you can re-apply numerous times until successful. Here are tips that can increase your chances of a successful mortgage application:
1. Start Saving Up
If the reason your previous application got declined was insufficient income or a lack of savings, then the best thing to do is save up. Buying a home is no small investment, and if you’re going to get approved for it, you need to be financially prepared. If your job pays well and you have room to save, this step will probably be the easiest.
2. Improve Your Credit Score
Another reason why a lender may reject your home loan application is a bad credit score. Common causes of bad ratings include bankruptcy, defaulting on a loan, foreclosure, and too many recent credit inquiries.
If a poor credit rating is a reason why your application was rejected, don’t worry. These three tips can help improve your credit rating.
- Take care of your debt
- Pay your bills on time
- Review your credit report and check for any mistakes and errors that could boost your rating if corrected
3. Spend Less
The best way to proceed after a rejected mortgage application due to insufficient income would be to cut down on your expenses. Additionally, you can consider changing your job to enable you to earn more or spend time on a side-hustle to boost earnings.
4. Get References if Required
If your previous application got declined because of financial problems, at least one lender would request that you get a few professional references to prove that there’s no funny business going on. While it’s not difficult, it can take up some time and effort.
5. Get Things Right Before You Re-Apply for a Loan
Before you re-apply for the home loan, make sure you’ve corrected all the issues that caused your first loan application to be rejected. Also, go for home loans that target your income bracket.
Contact the Better Rate Mortgage team
We know how frustrating and disheartening having your mortgage application denied can be. Luckily, we are ready to guide you through the mortgage application process, improve your chances of getting your mortgage application accepted and help you secure the best deal on the market. Get in touch with the team from Better Rate Mortgage.