How to turn your mortgage rejection into approval
People often get their mortgage applications rejected. There are a variety of reasons this can happen.
Do not take it personal.
There is hope. People who are turned down for mortgages have many options to rectify their status and reapply with positive results.
Jumboloanrates.net posted the article, “ Mortgage Loan Rejected – How to Get Approved,” written by Louie Latour, which provides some simple steps to take to ensure to get approved for a mortgage the next time you apply.
The first thing you will want to do is find out exactly why you were originally denied for a mortgage.
“Mortgage lenders are required by law to tell you exactly why they are denying your mortgage application. Common reasons for mortgage denial include an insufficient credit rating, too much debt versus income, and requesting too high a loan compared to the value of your home. Most reasons for denial can be corrected. Improving your financial situation requires discipline and patience, both of which will not cost you a dime.”
The first step you should take towards making your status mortgage worthy is to clean up your credit. Your first mistake when you originally applied for a mortgage was probably that you did not have a copy of your credit report.
You need to request copies of your credit reports from each of the three credit reporting bureaus and carefully check for errors. Inaccuracies in credit reports are extremely common and they will severely damage your score if you do not find and fix them.
Once you are certain that your credit reports are accurate you should concentrate on lowering your debt-to-income ratio.
“Your debt-to-income ratio is simply the sum of your debts versus your income. There are two ways to improve this ratio: get a better paying job, or pay off your debts. High paying jobs do not grow on trees so chances are your best option is to pay down the balances on your credit cards. If you have accounts that you rarely use such as department store credit cards consider closing these accounts.”
A major part of your credit score depends on your repayment history. It is important to have at least six months of consecutive on-time repayments on your record before you apply for a mortgage.
By making all of your payments on time and reducing your debt-to-income ratio, you will vastly improve your chance of mortgage approval.
Another thing you may consider is getting some help from the government. “FHA loans are an excellent way to get the mortgage you need. These mortgages are insured by the US government, and if you clean up your credit you might do much better qualifying under the Federal Housing Authority.”
There are many things you can do to improve your mortgage application, thus improving your chance of getting approved for a mortgage.