If you have been declined for a mortgage, you may think that buying that new home is out of reach. However, there are ways to turn a rejection into an approval and to find a more accessible loan. Here are 3 steps you can take to learn about your loan options and get the mortgage that works for you.
#1 Find Out Why the Mortgage Application Was Denied
Being turned down for a mortgage could be the result of not being matched with the right lender.
If your mortgage application was turned down, find how why. Lenders commonly deny mortgages for reasons such as a low credit score, a high debt-to-income ratio, or concerns about the applicant’s past and present employment status.
This information will help with applying for a mortgage the next time.
#2 Use an Experienced Mortgage Broker to Find a Lender
It typically doesn’t cost any more to use a mortgage broker compared to a retail lender, so using an experienced mortgage broker can sometimes mean the difference between rejection and approval of a home loan application. And besides, using a mortgage broker who helps to get a mortgage with better terms can save you thousands every year.
A mortgage broker acts as an intermediary between you and the lending institution. The broker’s principal job is to find a bank or direct lender for your home loan, and to get you the best possible mortgage for your specific circumstances.
So if you’ve been turned down for a home loan, an experienced mortgage broker will be able to explain the reasons for the rejection, and what can be done to help next time.
#3 Explore Ways to Get Down Payment and Closing Cost Assistance
While a first-time buyer may not have the cash on hand to make a larger payment, there may be programs that provide grants or low-interest loans that can be used as part of your down payment or to help pay closing costs. With this extra money, it may be possible to overcome lender objections and obtain a mortgage.
Your mortgage broker will be able to explain your options, and tell you about programs for which you may qualify, including zero down payment home loans.