Joanna Marie, Executive Chronicles | Applying for a mortgage to buy your dream home can be shattered by a bank when your application is rejected. No one likes to have their application rejected especially when they have been planning for a long time to own a house. There are many reasons as to why a bank may decide to deny your application and once this happen then it’s important for one to look at some of the reasons why the application was rejected. The one thing you need to know is that getting your application rejected does not mean you have run of options as there is a lot that you can do to ensure you get the loan.
- Seek Alternatives
Many people when looking for a mortgage immediately turn to banks; however banks have very strict policies regarding mortgage loans meaning that they may reject more application due to strict criteria. Most banks will start by calculate the debt-to-income ratio and also check to see if you have any outstanding debts in any other place. The bar for lending money for banks is very high as compare to other financial institutions. Getting rejected by one bank or a couple or banks is not the end. There are many financial institutions like Altrua Financial who have more flexibility meaning that a lender rejected by a bank can actually get a mortgage from another financial institution.
- Inquire about different type of Mortgage
There are different types of mortgage which are available and each mortgage has its regulation and guideline. You may find that you are not eligible for one kind of a mortgage loan but you are eligible for a couple of other types of mortgage. Talk to your bank or your lender to find a mortgage that will suit if your financial situation. The lender will look for a different type of mortgage and lay down the options for you to decide which he best alternative is.
- Repair Your Credit Score
The banks and other financial institution looks very carefully at the credit score to determine if you deserve to be given a loan or not. A bad credit score is one quickest way that banks will use to deny you the mortgage. This is because the credit score determines how risky you are as a borrower. Banks do not want to give someone a loan if they are not sure that that person is capable of repaying the loan. The people who have low credit score even if they get then the premium are too high that it may not be worth it. To make sure that your application is not rejected next time the goal is to repair the credit score. The process may take a few months as you will need to clear all your outstanding debts, pay on time and avoid opening new accounts. In repairing your credit score start by determining the ideal scores that the banks or financial institutions are looking for. There are times that your credit report may have a mistake, take time to thoroughly check it and fix in case of errors.