Hearing that your bank has turned down your mortgage application is not something that anyone who is looking to buy a house wants to hear. Unfortunately, it is something that more than 30% of people applying for a mortgage will hear. But what happens if you hear it? Is that it, and the dream of owning a house out the window? If your bank has turned you down for a mortgage, here are a few steps that you can take to make your dream of buying a house a reality.
Find Out Why You Did Not Qualify
It is important to find out why your application was not approved. By law you should receive a letter informing you that you were not approved for a mortgage, however, generally these letters are fairly vague. By speaking with someone at the bank who was a part of the application process you should be able to find out what caused your application to be turned down. This will help you move forward in finding a lender.
Review Your Credit
This is something that people ought to do prior to actually applying for a mortgage, to ensure that what the bank sees when reviewing your credit is accurate. That said, this is a step that is often missed, until the initial application has been denied. Mistakes on credit reports are more common than many people tend to think, because of this it is important to review yours and make sure that any mistakes made are corrected prior to looking for a lender.
Have an Appraisal done on the Property in Question
Often, the value of the property in question is simply not in line with the mortgage that you are eligible to get. If this is the case, it is a good idea to have an appraisal done by a third party professional. This allows you to approach potential new lenders with an up-to-date appraisal of the house that you are hoping to purchase.
Speak to a Mortgage Broker
Unlike banks, a mortgage broker’s job is to connect you with potential lenders who will consider lending to you even with less than ideal credit, or irregular income. It is important to note however, that some of the time these lenders require higher interest rates, or deposits. This is not always the case, however, because many are private lenders the requirements do vary. Speaking to a mortgage broker after having completed the first three steps discussed here is a better idea than visiting immediately after finding out that you have been turned down by your bank. This will allow you not only to gather your thoughts, but to also take a good look at your finances, and gain a better perspective on what kind of mortgage you can really take on – if at all.
Give it Time
Unfortunately, sometimes you just have to wait and sort out your finances a little bit more before being approved for a mortgage. This might mean putting more money away for your down payment, paying off debt, or working towards a higher income job, or a raise.