6 Steps You Should Take After Mortgage Loan Rejection

After receiving a letter stating that your mortgage loan application was rejected, you should follow the steps listed below. Review your credit score and debt-to-income ratio, as well as your income and assets. If you’ve been denied, don’t give up; there are other options available to you. The most important step is to be honest about your circumstances and provide as much documentation as possible. The lender should be able to provide copies of all of your submitted paperwork.

Credit score

If you have been rejected for a mortgage loan, you may be wondering how to raise your credit score after the rejection. Lenders review your credit reports to determine risk levels, so you need to be aware of any recent bankruptcy or other recent credit problems. The good news is that you can boost your credit score over time with a few simple steps. A secured credit card and on-time utility bills are two easy ways to increase your score. You can also consider joining credit monitoring services such as Credit Karma.

Debt-to-income ratio

You’ve probably heard of the term “debt-to-income ratio” or DTI – but what exactly is it? Simply put, the ratio is the ratio of your monthly debts to your gross monthly income. This number includes your monthly car payments, credit card payments, and even your mortgage principal and interest. Housing expenses, on the other hand, include the cost of your mortgage, monthly rent, and homeowner association fees.

Income

Before approving your mortgage loan, lenders look at your income, including investment income, work income, and other sources. Home loan lenders are required by law to calculate a borrower’s ability to repay the loan. If your income is below the lender’s threshold, your mortgage loan application will be declined. Here’s how to avoid having nasty surprises on your loan application. Continue reading for more information. And remember to keep all your income sources documented.

Assets

You have been denied a mortgage loan, but that does not mean you have to lose all your hard-earned money. Many lenders look at all your assets when deciding whether to approve you for a mortgage. Cash equivalent assets rank high in their importance because they are easily accessible. Cash is a liquid asset, so it is easy to turn a car into cash. However, cash does not have the same value as money in a bank account.

Co-signer

If you’ve been rejected for a mortgage loan by a lender because of a co-signer’s bad credit, you may want to look for another co-signer. Ask a friend or family member with good credit to co-sign for you. While this may sound like a good idea, it can be risky. You may receive a less-than-enthusiastic response.