October 18th, 2011
If you’ve recently been rejected for a mortgage or refinance, you’re not alone, and you shouldn’t give up. Standards for borrowing have tightened, but that doesn’t mean you should give up on this prime time to buy. In her blog post, “Rejected For A Mortgage Loan? Here’s What You Need To Do,” Vivian Giang offers advice for those who have been rejected.
First, Giang says find out why you were rejected. The Equal Credit Opportunity Act requires lenders to inform potential borrowers of the reasons why they were rejected in writing within 30 days.
Then you should make an appointment with your loan officer to discuss why you were rejected. It could be something as trivial as a couple thousand dollars, and in that case you’ll know what you need to do to modify your application.
Giang says if it has to do with a problem on your credit report, make sure to ask the loan officer for the name and contact information of the credit agency that was used. By law the agency must provide you with a credit report within 60 days. If your score is just a few points too low, find out what you need to do to raise it. Credit scores can change each month, so it could be a matter of paying off a credit card.
You also want to ask about different loan programs, as the qualifications vary from loan to loan. Just make sure you don’t apply for more than 5 loans within a 6-month time period.
If you found your dream home and you’re scared to lose it due to the rejection, Giang says,
“You can renegotiate with the seller for a lower purchase price and therefore, a lower loan amount, or see if an additional down payment will be accepted to cover the difference between the appraised and purchase prices.”
If you suspect your loan was wrongfully rejected, report it to the Federal Trade Commission at www.ftc.gov or by calling toll-free 1-877-FTC-HELP.