People are denied mortgages for a variety of reasons. If your mortgage application is denied, it is a hard thing not to take personally. Here is what you need to turn that denial into an approval with a better mortgage lender. Mortgage lenders are required by law to tell you exactly why they are denying your mortgage application. Common reasons for mortgage denial include an insufficient credit rating, too much debt versus income, and requesting too high a loan compared to the value of your home. Most reasons for denial can be corrected. Improving your financial situation requires discipline and patience, both of which will not cost you a dime. Here is how to get started improving your financial picture. Clean Up Your Credit If you did not check your credit report before applying for the mortgage, that was your first mistake. You need to request copies of your credit reports from each of the three credit reporting bureaus and carefully check for errors. Inaccuracies in credit records are an extremely common occurrence and having these errors in your credit records can kill your credit score. If you find errors in your credit records you will need to dispute the error with the corresponding credit bureau and the creditor responsible for placing it there. Once you are certain that your credit reports are accurate you should work to lower your debt-to-income ratio. Debt-to-Income Ratio Your debt-to-income ratio is simply the sum of your debts versus your income. There are two ways to improve this ratio: get a better paying job, or pay off your debts. High paying jobs do not grow on trees so chances are your best option is to pay down the balances on your credit cards. If you have accounts that you rarely use such as department store credit cards consider closing these accounts. On Time Payment History A large part of your credit score depends on your repayment history. It is important to have at least six months of on time repayments on your record before you apply for a mortgage. Making all of your payments on time and reducing your debt-to-income ratio is the quickest way to boost your credit score and get you on the path to a mortgage approval. Get a Little Help From Uncle Sam FHA loans are an excellent way to get the mortgage you need. These mortgages are insured by the US government, and if you clean up your credit you might do much better qualifying under the Federal Housing Authority. Cleaning up your finances is not quick and easy; with a little help, you can do it. To get the help you need sign up for a free mortgage guidebook. |
