What Steps Should You Take When You've Been Denied A Mortgage Loan?

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So, you searched the ends of the earth—well, it feels like it anyway!—for the absolute perfect home for you and your family, got the preapproval for the home, and are now in the underwriting phase of the loan approval. Sadly, your hopes of home ownership are thrown out the window when the home mortgage lender informs you that your mortgage loan was not approved. If this happens, don't get too discouraged, as there are steps that you can take to get back on track. Keep reading to learn a few tips on what you can do when your home mortgage loan has been denied during the underwriting process.

Go After a Lower Loan Amount

In some cases, you may be able to get the underwriter to change his or her mind if you are willing to consider a lower amount for your home loan. This is particularly true if your debt-to-loan ratio or income fell just outside of the financial threshold for the original amount that you were asking for in a mortgage loan.

Take Immediate Action

It is required of the lender to inform you of why you were denied the mortgage loan. You may have been denied because of an unfavorable credit score, having too much debt, or something else entirely. If you are fully committed to obtaining a mortgage loan approval, then you should go over the reasons for denial thoroughly, ask any questions that you may have, and take action in improving against them. While this will take some time, possibly even up to a year, the lender will notice the effort that you have put forth in making positive changes in your finances.

Consider Alternative Loan Options

Another option you have is to go with a different loan program. After all, the lender that you applied to is not the only one out there. If you were denied due to a less-than-perfect credit history, there are loans programs that were designed specifically for individuals like you. There are programs specifically for military veterans and first-time home buyers, as well as governments programs that require zero down payment. With that being said, there is a chance you can find an alternative option to secure your home financing.

If you receive a denial, don't give up on owning a home, as it is still completely possible. Reach out to a lender in your area who an help you find the right mortgage loan program for your situation. 

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