Have You Been Denied on a Loan Application?
The Mortgage Bankers Association says that mortgage lenders end up rejecting around one of every two applicants requesting a refinance on their mortgage today. Around 30 percent of new mortgage applicants are also denied. This denial, whether for a new mortgage or for a refinance, can certainly be discouraging – but it does not have to mean the end of your quest for a mortgage loan.
Learn the Denial Reason
The law says that you are entitled to a letter explaining the reason for your mortgage denial, but all too often these letters are quite vague. If the denial letter doesn’t offer a sufficient explanation, give your lender a call. Tell them what the denial letter said and ask for some clarification.
Often, you can get some really valuable information from the lending officer. He may even be able to tell you some specific points that you can change before you apply again. For example, the lender may notice some specific rocky areas of your credit that, once repaired, can get you approved.
In other cases, you might have been rejected because the property was not appraised at a value that would support the loan amount. This is something you cannot control in many cases. Consider doing an application through a different lender, who will get another appraisal. Sometimes a lowball appraisal can wreck the chances of a mortgage approval. If you get a realistic appraisal of the property’s value, there’s a chance you can still get that loan provided your credit is reasonably good.