Posted by Marie Presti on 11/25/2018

Going through the process of applying for a mortgage only for your application to get denied can be a frustrating and confusing time. If you’re hoping to buy your own home in the near future, it’s vital to secure financing or you risk missing out on a home that you may have been depending on getting.

In today’s post, we’re going to talk about what happens when your mortgage application is denied and what you can do to fix the problem as quickly as possible.

Determine the Cause of Denial

If your application is denied, priority number one needs to be to understand what happened. Since lenders are required to provide denied applicants with a letter explaining why they were denied, this just means reading the letter and making sure you understand all of the reasons listed.

There are a few common reasons that an application may be denied. Some of them are simple fixes, while others might require time and effort on your part that may delay your house hunt for a while.

One issue that many mortgage applicants have to handle is when their employer won’t provide proof of income to a mortgage lender. Since income verification is vital to the mortgage application process, it’s important to make sure you can provide all of your income details from the last 2 years to the lender.

Sometimes there are issues with contacting employers, such as when your former place of employment goes out of business. Or, you may be a freelance or contract worker with atypical forms of income verification. Regardless, make sure you are clear with your loan officer regarding your employment history.

Other common causes for denial of an application include problems with your down payment (such as not meeting the required down payment amount) and credit history issues, such as having a lower score than you thought.

Credit score lower than expected

It’s not uncommon for a lender to run a credit check and come up with a score that is lower than you anticipated. Since scores change on a monthly basis, and since there are differences between the scores provided by the three major credit bureaus, you might find that your lender found a score slightly lower than what thought.

If the score is drastically different, however, this could be a sign of two things. First, make sure that you haven’t recently made multiple credit inquiries (such as applying to several lenders who perform credit checks) or by opening new credit cards or loans. These inquiries temporarily lower your credit score.

If you haven’t recently made any inquiries (other than applying for a mortgage with your lender of choice), then it’s a good idea to get a detailed credit report and scrutinize it for errors. Inaccuracies on your credit report can be disputed and resolved and can give your score the boost you need to be competitive on your mortgage application.  

Choosing a different lender

While most lenders use similar criteria in determining your borrowing eligibility, there are some differences between lenders.

For example, some lenders might take on more risk by lending to someone with a lower credit score. However, they will also likely require a higher interest rate in exchange for the added risk they’ve acquired.


Now that you know your options for what to do when an application is denied, you’re well-equipped to start tackling the issue and getting back on track to becoming a homeowner.





Posted by Marie Presti on 7/17/2016

Do you know the difference between adjustable-rate and fixed-rate mortgages? An adjustable-rate mortgage (ARM) includes an interest rate that will change periodically based on market conditions. In many cases, homebuyers prefer fixed-rate mortgages (FRMs), as these mortgages enable homebuyers to pay the same monthly mortgage payment for the life of their loan. Conversely, an ARM may start with lower monthly payments but could rise over an extended period of time. This means that an ARM is likely to result in mortgage payments that vary over the years. Although an ARM may seem like an inferior option to its fixed-rate counterpart, there are several scenarios in which a homebuyer may prefer an ARM, including: 1. A Homebuyer Is Purchasing a Residence for the First Time. A first-time homebuyer may enter the real estate market with lofty expectations. But upon realizing there are few housing options that meet his or her needs, this buyer may settle for a house that represents a short-term residence. In this scenario, a homebuyer may be better off selecting an ARM. With an ARM, a first-time homebuyer may be able to make lower monthly payments in the first few years of homeownership. And then, when a better homeownership opportunity becomes available, this buyer may be able to work toward upgrading from his or her starter residence. 2. A Homebuyer Expects His or Her Income to Rise. The economy may fluctuate at times, but those who are assured of a higher income over the next few years may be better equipped to handle an ARM. For example, a student who is enrolled in a medical residency program may be a few years away from becoming a doctor. At the same time, this student wants a nice place that he or she can call home and may consider an ARM because it offers lower monthly payments initially. After this student completes the residency program, he or she likely will see a jump in his or her annual income as well. Thus, this homebuyer may be best served with an ARM. 3. A Homebuyer Is Facing an Empty Nest. Will your children soon be moving out of the home in the next few years? If so, now may be a great time to consider an ARM if you'd like to move into a new residence. Parents who are facing an empty nest in the next few years may be better off living in a larger residence for now, then downsizing after their children leave the nest. Therefore, with an ARM, parents may be able to buy a nicer home with lower monthly payments. And after their kids move out, these parents always can look into downsizing accordingly. Deciding which type of mortgage is right for you can be challenging for even an experienced homebuyer. Fortunately, lenders are available to answer any concerns or questions you may have, and your real estate agent may be able to offer guidance and tips as well. Explore all of the mortgage options at your disposal before you purchase a new residence. By doing so, you'll be equipped with the necessary information to make an informed decision that will serve you well both now and in the future.





Posted by Marie Presti on 1/31/2016

Are you looking to buy a bigger home? If you are looking to make the move a jumbo mortgage might be right for you. A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO) or better known as Fannie Mae and Freddie Mac. Currently, the loan limit is $417,000 in most parts of the United States, but can increase to $625,500 in the higher cost areas. OFHEO sets the conforming loan limit size on an annual basis. Jumbo loans have slightly higher interest rates because they carry more credit risk.




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