CT Mortgages

If Your Mortgage Is Rejected!

Deborah Laemmerhirt  203-994-4297  HomesInConnecticutForSale.com

Mortgage applications get denied... it happens every day. If it happens to you, you can give up the dream of home ownership, or take a proactive approach and fix whatever problems caused the rejection.

When lenders turn down a loan application, they are required to tell you why. That requirement is intended, in part, to keep lenders from making loan decisions based on discriminatory factors such as race or gender. But it also provides applicants with the information they need to strengthen their overall financial situations.

Give Your Loan Application the Best Chance for Approval

  • Employment stability is a big part of the picture when you are asking someone to trust you with a decades-long year mortgage. If you've been at your current job for less than two years but have been in the same industry for a longer period, be sure you note that in your application.
  • Before you apply for a loan, get a copy of your credit report (you may want to get copies from each of the three reporting bureaus, since they may contain different information). Check it for inaccuracies and outdated information. It can take 30 days or more to correct errors, so start early.
  • If extraordinary circumstances like a job lay-off or medical emergency have created temporary bill-paying problems in the past, explain this to the lender.
  • Provide documentation that the lender asks for as soon as possible. If you're too busy to get the paperwork together and answer whatever questions the lender has, it may be a good idea to wait until you can do what it takes to push the application through. Lenders have three days from the day you file your application to give you a Good Faith Estimate of the fees that will be due at closing. If you fill out an application and then don't give the lender the necessary information right away, he or she may have no choice but to close the application process.

First, you should know how the basic process works. When you apply for a mortgage, here's what to expect:

  • You will receive an approval or rejection within 30 days of submitting a completed application.
  • If your application is denied, your lender must tell you, in writing, specifically why you were not approved (or give you have 60 days to ask the reasons for the rejection). It's not enough for lenders to say "you didn't meet our standards." They must provide details such as "not enough time on the job," or "your income is too low." Once you know where your financial weaknesses are, you can focus on fixing the problems.
  • Your mortgage may have been approved, but on less favorable terms than you originally applied for. In that case, lenders must tell you why you didn't qualify for better terms (if you ask), but only if you turn down the counter offer, according to the Federal Trade Commission.
  • If your mortgage was rejected because of something in your credit report, the lender is required to tell you how to contact the credit bureau that issued the report. If you ask within 60 days, the bureau will provide you with a free copy of your report. Plus, under the Fair Credit Reporting Act, all consumers are entitled to receive one free report each year, which you can get order visiting the annualcreditreport.com Web site. If there is inaccurate information in your credit report, the credit bureau must investigate if you file a dispute. The company that provided the inaccurate information must also reinvestigate your claim and report the findings. If, after the investigation the inaccurate information remains and you still dispute it, include a summary of your position in your credit file.
  • A poor appraisal may all or part of the reason for your mortgage denial. Ask the lender for a copy and check it for inaccuracies such as age, location, and dimensions of the home. Also verify that there was no illegal component to the appraiser's decision, such as the racial makeup of the neighborhood. The appraiser works directly or indirectly for your lender, so if there are factual errors, or illegal information in the appraisal, point these things out to your lender and ask him or her to contact the appraiser.

Depending on the reason for the mortgage denial, it may just be a matter of time, or you may need to take action. If you've made a habit of job hopping, settle down and stick with one employer long enough to develop a stable history. If your credit history is shaky, stop opening new accounts and make a concerted effort to pay down the ones you have. Keep balances on all accounts low, since part of your credit score depends on how much of your available credit you are using. Pay bills on time. If you have old credit accounts with zero balances, don't close them or you could negatively impact your credit score. Keep them open and cut up the credit cards.

Barring unforeseen circumstances such as a medical emergency or a job lay off, anyone can become creditworthy with time and diligence.

About Deborah Laemmerhirt, CT,Newtown, Bethel, Ridgefield, Redding,Roxbury,Bridgewater (Previews - Coldwell Banker - CT)