A mortgage is required to buy a house. It can be challenging for some home buyers to obtain a mortgage. Sometimes banks and other lenders/brokers are reluctant to lend money to certain customers.
Sometimes however, lenders/brokers may not be able to give you the right reasons for denial. Don’t lose heart if you are denied for a mortgage. These are three factors that can impact your chances of being approved for a second mortgage.
A Second Assessment Could Change Your Situation
Mortgage Brokers/Lenders may refuse to lend you money if the property’s worth isn’t sufficient to cover the loan. If your mortgage lender refuses you a loan because of a low loan to value ratio, a second appraisal might be useful. Different appraisal companies may provide different appraisals of the same property. Some brokers report valuation variations as high as $1.3million.
Remember that you cannot get two appraisals from the same lender. You will need another broker or lender if you wish to have your home appraised once again.
Cleaning Up Your Credit Report Can Work Wonders
The credit score can have a major impact on whether or not you get approved for the mortgage that you want. It is important to correct any negative credit reports that led to your denial. Call your creditor and ask them to delete any negative entries to restore your credit score.
You will also want to pay off any outstanding balances as soon as possible. If you are unable or unwilling to pay the full amount, your creditor may be able to negotiate partial payments. This will make the debt appear in your credit report as “paid pursuant to agreement” which will increase your credit score.
It’s a Good Idea to Make an Additional Down Payment.
Mortgage Brokers/Lenders might decline to lend money to borrowers who request too much. If you seek a mortgage amounting to more than 95% of the property’s worth, you may be denied. Your loan amount may be reduced if you pay a higher down payment. This could encourage your lender approve your application.
If you are denied for a mortgage, don’t despair. As you can see, there are steps you can take in order to get approved.
