Your Mortgage Was Denied! Now what do you do?

Well of course not having good credit is going to get your loan not approved, but another thing many buyers don't take into consideration is the appraisal. In this hot seller's market, many buyers here in the Silicon Valley/San Jose area have to make offers way over asking to get their offer accepted by the seller. Once you get into contract, sometime before escrow close the bank will conduct an appraisal and if home valued way under the asking price, the bank won't fund the load - dooh!!! Of course the buyer could come up with the cash for the difference if they like, but I'm just telling you here in case you haven't hear it already.

YOUR MORTGAGE WAS DENIED, NOW WHAT DO YOU DO?

It's a terrible feeling to have a mortgage loan denied. Most people are going to feel frustrated, but there are things that you can do change your circumstances. At least one third of all new home applications and one half of refinance applications are turned down. After the real estate meltdown in 2008 most lenders were understandably hesitant to write loans for any but the most qualified borrowers.

The first thing you need to do as a consumer is ask yourself,"Why was my loan request denied"? Talk to the officer handling your file and ask very specific questions, now is not the time to be timid. Once you find out the particulars you might even find out that you aren't the problem. Sometimes the problem can be caused by a low appraisal. When an appraisal comes in low, it can adversely affect the loan to value ratio making it impossible to get a loan. Add to that the fact that a single appraisal can vary widely from one appraiser to the next. Unfortunately, while you are legally entitled to a rebuttal, they rarely result in a higher value and the banks can't accept a second appraisal by law. If you find yourself in this situation it's probably best to start looking for a new lender.

OK, so your loan officer tells you that the problem is your credit score. But there isnothing you can do to change your score right? Wrong! There is a lot that you can do to improve your credit score. Unfortunately none of these fixes will work overnight. It usually takes between 60 to 120 days for payments and corrections to show up on your credit report. The first step is to know what your current credit scores are. The second is to get a copy of your free credit report. Federal law insures that you can get a free copy of your credit report every 12 months from each credit reporting company. After reviewing your rights and identifying any errors, you can now start paying down any outstanding balances and addressing any issues found on the report. Reducing your debt to income ratio can go a long way toward making you an excellent loan candidate.



Source: RealtyTimes, Kelly Taylor
http://lakewoodranchkelly.realtytimes.com/advicefromagents1/item/33279-your-mortgage-was-denied-now-what-do-you-do