You worked hard to complete the long mortgage loan application process, and while searching for what you hoped could be your perfect place, you found your dream home. You were sure you were all set, but it happened — your home mortgage loan application was declined. Some of it may be explained in your formal rejection letter. But instead of doing nothing about it, now is the time we suggest using a denial to understand why your loan was declined. You can also take proactive steps to make sure your loan is accepted next time.
Typically, there are 4 reasons your home mortgage loan application has been declined:
- Your financial records aren’t accurate
If you believe you’re earning enough to be able to afford your monthly mortgage payment, along with paying all of your bills, you may be surprised to learn how often a loan application packet doesn’t include the current documents needed to verify income and any assets. But you need to know: no up-to-date records provided, most likely, no loan.
Our lending team can look over all of your documents to figure out your income-to-debt ratio, and let you know the mortgage payment amount you can afford. You’ll also be asked to show your tax forms from the last several years.
Your credit history is poor
If you have had a past foreclosure, filed for bankruptcy, or have other remarks on your credit report, it is often the first look your lender gets into your financial situation when deciding if you are a risky investment for a home mortgage loan. Many lenders also decline a mortgage loan if your overall credit history is poor, and if your FICO score is low.
We believe many of the corrections can begin by looking at the history of your finances. Our lenders will dig into the information in your credit report to help you understand why your score is low, and how to take steps to correct it.
Your down payment is too small
If you could only pull together a low down payment, your lender probably denied your application because the small down payment wasn’t considered a decent investment in your future home. Many lenders believe bigger is better when it comes to getting your home mortgage loan application approved.
Our lenders have insight into many loan programs, including federally-backed mortgage loans that may require a small, or no down payment. Some of these options include loans specifically for a home being purchased by a Veteran, a home that is in Wisconsin, or even a home that is considered rural. No down payment doesn’t necessarily mean, no home loan!
Your employment history is inconsistent
If you can’t document regular employment of over the past two years, your home mortgage loan may have been denied. Some loan applications have different requirements, but your lender wanted consistent information showing you held a job and would be able to pay back the money loaned to you.
Our lenders work personally with you to find every possible means to help you get into a home. We’ll tell you what you need, every step of the way, including various ideas to prove your employment by obtaining pay stubs, tax information, and more.
If you have been denied a home mortgage loan, don’t give up. Contact us to find the home loan program that works right for you — and your particular situation. We want to help you make your dreams of owning a home come true.