Turned down for a mortgage — now what?
For many, being turned down for a mortgage is embarrassing and upsetting. Maybe even a slap in the face. But it shouldn’t be — often, it’s just a mismatch between a loan applicant and a program or lender, and it can be fixed.
Elite Financial has a variety of programs in order to meet the demands of potential borrowers with a variety of qualifying needs.
Don’t Beat Yourself Up
Imagine you’re playing games at a carnival. If you throw a dart and miss the bull’s-eye, do you slink away and never return? Or do you adjust your throw and try again? If you’re like most people, you shrug off a bad throw and make another attempt. That’s exactly what you should do if your mortgage application is declined — learn from your “miss” and adjust. Elite Financial has an experienced staff of professionals to guide you towards your goals, as they understand what underwriters want.
Mortgage lenders are required by law to issue an “adverse action” letter within 30 days when they decline a loan application. This letter must either state the principal reason(s) for the action or provide contact information so you can request it anytime within the next 60 days. Your next course of action depends on the reason(s) provided by the lender. Common reasons include a too-low credit score, short job history, too much debt, insufficient income, derogatory credit, or income instability.
What about the effect of multiple applications on your credit score? No worries – according to MyFICO.com, “FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping. In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry.”
One of the characteristics of a good loan professional is willingness to help and educate the client. You should be able to ask Elite Financial these questions and get solid answers:
- How much does my income / credit score / down payment / assets / whatever have to change before I can be approved?
- Is there another program that could work for me?
- Can we try again with a smaller loan amount / larger down payment / lower interest rate / less debt / more assets / whatever?
Fix Credit Reporting Errors
If the issue is a credit score that “just missed,” go through your report with your loan officer and make sure it’s accurate. If an error caused your score to be lower, Elite Financial may be able to help you fix it by using a “rapid rescore.” These companies work only through lenders, and they can clear mistakes (you must submit proof of the error) and quickly re-score your credit report. Note that this service has a nominal cost, there is no guarantee that your score will increase, and only entries proven to be inaccurate can be altered.
Play with Numbers
Most lenders underwrite mortgage applications with automated underwriting systems (AUS). Not only can these systems provide preliminary underwriting decisions very quickly; they allow loan officers to “test drive” hypothetical situations. For instance, if Fannie Mae’s Desktop Underwriter (DU) declines your application, your loan officer could resubmit it based on another scenario — for example, with a higher down payment. If you get a preliminary approval under that scenario, you know what you have to do.
Elite Financial professionals have assisted borrowers for over 26 years. Elite Financial has numerous sources, many more programs, and looser underwriting criteria available than you will find at any individual bank. Best of all, there is no banking attitude at Elite Financial—we want to provide you with a safe and affordable loan that attains your goals.