A mortgage lender turning down your application for a home loan is disappointing. However, it’s not the end of your homeownership dreams.
To answer the question, “what happens if I get turned down for a mortgage?” we’ll cover the steps to take below.
Find Out the Reason for the Rejection
The lender will communicate the reasons for rejecting your mortgage loan application. Some common reasons include:
- Recent changes in your employment situation. Changing jobs or leaving paid employment puts a question mark on your financial stability.
- Credit-related problems. A low credit score marks you as a high-risk customer.
- Excess debt. Your debt-to-income ratio will work against you if you have too much debt.
- Suspicious income. A sudden influx of cash to your account just before your application may leave the lender worried about the deposit source.
Once you find out the reason for the rejection, you can find ways to resolve it.
Improve Your Income
Where possible, you should consider additional ways to earn more money. Increasing your monthly income will assure lenders that you can keep up with your financial obligations each month.
Increase the Down Payment
When looking for answers to “what happens if I get turned down for a mortgage,” many people don’t consider the down payment.
Putting up a higher down payment on the house is a good way to lower the lender’s risk. If you can’t afford to do so now, give yourself a timeline and save up towards it.
Find a Co-Signer
A co-signer with a strong financial record will repay the mortgage debt if you can’t. Your loan applications may receive more favorable attention if you find a good candidate willing to take on the risk.
All mortgage lenders have their set template for reviewing loan applications. If one lender turns you down, the other might consider you a good candidate for a loan.
You can also look beyond banks and consider a lending company like Priority Lending LLC. We offer Tucson’s best mortgage rates.
Remember to read the fine print when choosing other lenders after a rejection. The lenders will see the reasons for your earlier rejection and arrive at a similar conclusion. However, if they are going to process your loan, there may be a catch like higher interest rates
Wait a Few Years and Try Again
During the wait time, be sure to intentionally work on some of the reasons for your rejection.
Do you have too much debt? Work towards paying it down or seek debt help where possible.
Is your job situation fluid? Try to stay longer in a job for a few years.
While you wait, you should work toward improving your credit score. You can boost your score by:
- Checking the reports for errors.
- Paying down all your debt.
- Avoid missing payment windows.
- Use credit-building tools like a secured card.
Get Help with Your Mortgage
Now you know the answer to “what happens if I get turned down for a mortgage?”
Are you ready to apply? Learn whether to get a home loan from a bank or lender.
Call Priority Lending LLC today at (520) 231-1413 to discuss your mortgage needs in Tucson, AZ.