Being denied for a mortgage is probably one of the more deflating feelings you can experience. The second that feeling in the pit of your stomach hits, it’s all downhill for a awhile. Not that being denied is anything to be ashamed of, it happens to lot of people everyday. Lending hundreds of thousands of dollars is hazardous territory, especially when the borrower doesn’t live up to their end of the bargain.
Of course, no one got anywhere in life by hearing that first “no” and calling it quits. That specific no you heard is complete and final, but that doesn’t mean there isn’t a big “yes” somewhere in your future. Here are 5 tips that may help you get approved the next time.
1. Don’t Go It Alone
Perhaps the first time you applied for a mortgage was unsuccessful because you didn’t have quite enough ammunition. Using a co-signer the next time you apply might be the extra push that’s needed to get the job done. Quite often, the co-signer is a parent but it doesn’t have to be.
Basically, a co-signer must have a certain income and they must be willing to accept responsibility for the entirety of the mortgage if you happen to default. That is likely why so many co-signers are parents, because it takes a lot of trust to take the risk.
2. Don’t Rush “Next Time”
So often, a prospective home buyer is denied for a mortgage and the only thing on his mind is to rush right out there and give it another try. This is an admirable mentality, but it might not get you what you want. Sometimes, taking a deep breath and waiting for the lending conditions to lighten is the best course of action. You may be eager and excited to get yourself into a house of your own, but keep your end goal in mind when crafting the plan and wait, if necessary.
3. Take It Down a Notch or Two
Perhaps the solution to getting approved next time is to set your sights a little lower than you did the first time. This will combat the “not wanting to wait” issue and will improve your chances of being approved. Taking it down a notch might include a townhouse or condo instead of a detached house, less square footage, or even looking in a nearby city or town where real estate prices are lower.
Lowering your sights a little doesn’t mean that you have failed or that you are settling, it just means your judgment was slightly off the first time. It happens to everyone from time to time. Maybe you were steered in the wrong direction by an agent or acquaintance, or maybe you just underestimated the market; either way, makes an adjustment and you may find success.
4. Explore Your Lending Options
Sometimes, a no will carry on through any and all lenders because your financial situation is so dismal, but that is seldom the case. If you’ve heard a no from one mortgage lender and you really aren’t satisfied with the explanation, give another mortgage broker a try. The reason for your denial might not be that big a deal.
However, before you start throwing out mortgage applications all over the place, ask around to get a decent read on the market. You might be able to narrow down a lender that is more likely to approve your mortgage application by asking around a little. Be careful of outrageous interest rates or hidden fees, but mortgage brokerages, banks and credit unions are all possibilities. If you didn’t get a nice feeling with one type of lender the first time, try a different one the next time around.
5. Discover the “Why”
If you try more than one lender and the reason for your loan rejection is always the same, there is a good chance that the issue is with you and not with the lender. Even if you have only applied and been denied one time, finding out the “why” is one of the most effective ways to get approved next time.
When you know why, you can work on that aspect of your situation so it won’t be an issue next time. It is similar to working on the root cause of an illness rather than just the symptoms. Once you have narrowed down the “why” you can work on fixing it for next time. Whether that is not enough income or poor credit or aiming too high with your home selection, isolating and then fixing the problem should reverse the decision next time.
Ricky Meyer is a professional financial expert, who has more than ten years of experience in Mortgage and financial consulting. He pens his experiences that are worth sharing. You can follow him at Google Plus .