Denied a mortgage? Don't get mad — get approved
Your mortgage rejection may have little or nothing to do with you, experts say. Trying again may be the best move.
Home-mortgage applications were down 6.3 percent in the final full week of December, according to the Mortgage Bankers Association, and mortgage-refinancing applications were down even further, sliding by 8 percent.
"Following the Federal Reserve's taper announcement, mortgage application volume dropped again last week, with rates increasing and refinance application volume falling to its lowest levels since November 2008," says Mike Frantantoni, the MBA's vice president of research. "Purchase application volume were weak too, continuing to run more than 10 percent below last year's pace."
Post continues below
It could mean a bigger window of opportunity for homebuyers or homeowners looking to refinance.
But what if you apply for a new mortgage and get denied? After all, there is no guarantee you'll get approved your first trip to the plate.
The important thing? Just keep swinging, mortgage experts say.
"Different lenders have different standards," said Ray Brousseau, executive vice president with Carrington Mortgage Services, a Santa Ana, Calif., mortgage lender. "Where one lender looks at a loan file and sees a red flag, we might see green. For this reason, it's important not to take a loan rejection personally or consider it a black mark. Just regroup and speak with a replacement lender who can get the job done."
Brousseau offers some pointers for mortgage applicants coming out of a denial:
First, you're more ready than you think. Go ahead and jump right back into the mortgage market — you have everything you need to try again.
"When you submitted your first loan application, it took some time to pull together the necessary documents and forms," Brousseau says. "Now you have those materials in hand, and you have a current and usable appraisal that a replacement lender can consider. The result is that you may be able to breeze through the underwriting process with a second lender a lot faster and with a lot less hassle than the first."
Ask about credit. If a low credit score is an issue, ask multiple lenders if they have special programs for low-credit mortgage applicants. Many lenders (Carrington is one) have such programs in place.
- MSN Money: 5 tips to get your bank loan approved
It might not be about you, specifically. Loan requirements have lots of moving parts and change frequently. That means you can get rejected today and accepted next week based on changing loan requirements.
"Loan requirements change all the time," Brousseau says. "This happens because investors enter and leave the mortgage marketplace on a constant basis, so there are always new programs with new guidelines to consider. The result is that a borrower who does not qualify one day may well qualify the next."
Don't take on any new debt. Brousseau advises not taking out any new loans or credit while you're going through the mortgage-loan experience — especially if you've been denied a mortgage already.
"When a loan is declined, it's extremely important for borrowers to create a financial 'quiet period,' a time in which they do not make major purchases, increase credit balances or open new credit accounts," Brousseau says. "Financial quiet periods can help borrowers avoid sliding over debt limits during the application process."
More from MainStreet
I was surprised at the quantity of information required. Some of it indicates increased review which makes sense. Other items serve no purpose I can see, save proving the person I'm dealing with is incapable of thinking or not allowed to make decisions.
It is interesting.
Listen, the banks said I was NOT worthy for getting a mortgage so I went on the private market and got a five yr 5% mortgage for 100K.
Paid the thing of in under 4 yrs, now they want me get all kinds of stuff from them, NEVER again with an AMERICAN government sponsored thieving program.
Got an Indian finance mortgage and bank account and am doing just fine.
Screw American thieves/banks.
All I do now a days is live in this country all my banking and other financial issues are done outside of the United States.
Everybody in the banking sector seems to forget one big thing, IT IS OUR MONEY YOU MESS WITH NOT YOURS.
there is a specific reason to why you get denied for a mortgage