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Was your mortgage loan application denied? 9 steps to take
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For many aspiring homebuyers, the dream of homeownership has become increasingly difficult to attain in recent years. A combination of soaring home prices and rising mortgage rates has made purchasing a property significantly more expensive, stretching budgets to their limits. For example, the median home price nationwide hit $417,700 in Q4 2023 — up from an average of $327,100 in Q4 2019. And, 30-year fixed mortgage rates currently average 7.30%, more than double what they were just a few years ago.
That said, it can still make sense to buy a home right now, even with today’s unique challenges looming. After all, high rates generally mean buyer competition is down, so it could be a good time to make your move. And, while you may be thinking about waiting for rates to fall, there’s no guarantee that will happen in the near future. Plus, you always have the option to refinance your mortgage loan at a lower rate if mortgage rates do eventually decline.
But getting approved for a mortgage in today’s unique landscape can prove challenging even for borrowers with strong credit and stable employment. Lenders have understandably grown more cautious in the face of economic headwinds, making the application process more rigorous. So what should you do if your mortgage loan application is denied by a lender?
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Was your mortgage loan application denied? 9 steps to take
If your mortgage application has been denied, it’s important not to lose hope. There are steps you can take to improve your chances of approval:
Request the denial reasons in writing
By law, lenders must provide you with the specific reasons for denial in writing upon request. This documentation is essential, as it will allow you to precisely identify and address the problem areas that led to the rejection. Never assume you know the reasons; get them directly from the lender so you know what to focus on instead.
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Review your credit report
Mistakes and inaccuracies on credit reports are surprisingly common. If your mortgage loan application is denied, obtain your free annual credit reports from all three major bureaus (Experian, Equifax and TransUnion) and scrutinize them carefully. If you find any errors, dispute them with the credit bureaus to have them corrected or removed, as this could significantly boost your approval chances.
Work to improve your credit
For many buyers, a subpar credit score is the roadblock to mortgage approval. If a low credit score causes your mortgage application to be denied, take proactive steps like paying all bills on time each month, reducing outstanding balances on credit cards and other loans and avoiding opening new credit accounts in the short term. Improving your credit profile can rapidly enhance your mortgage eligibility.
Increase your down payment
Many lenders favor borrowers who can make larger down payments upfront. Not only does this lower the overall mortgage loan amount, but it demonstrates your commitment and ability as a borrower. Options to boost your upfront contribution include tapping employment bonuses, tax refunds, gifts from relatives or simply saving more aggressively.
Find a co-signer
If your own income and credit aren’t adequate for mortgage approval, applying jointly with a creditworthy co-signer could be the solution. A spouse, parent or other party with strong finances can boost the overall application through their positive profile. However, it’s imperative that all parties understand and accept the legal obligations before proceeding.
Explore government-backed loans
While conventional mortgages from banks and lenders typically have stringent requirements, loans insured by government agencies tend to have more flexibility. If you meet the eligibility criteria for an FHA, VA or USDA loan based on income limits, military service or rural location, these could represent a pathway to homeownership.
Find ways to increase your income
If you’re denied due to a high debt-to-income (DTI) ratio, finding ways to boost your monthly earnings could be the deciding factor. Options to do this include requesting a raise from your current employer, finding a higher-paying job or establishing steady side income from a second job or freelance work.
Change lenders
Not all mortgage lenders evaluate applications through the same underwriting models or with the same risk appetite. While one bank may deny you, another lender could give you a green light after reviewing the exact same financial information. So, if you’re denied a mortgage loan with one lender, it makes sense to shop around, ask questions and get multiple assessments to find the right fit.
Wait and apply again
Mortgage approvals are based on a specific snapshot of your finances at one point in time. If rejected, sometimes the best recourse is to press pause, work on improving weak areas over several months and then reapply with an updated financial profile for a fresh evaluation.
The bottom line
A denied mortgage can be disheartening, but don’t give up hope. With diligent preparation, an openness to explore alternative pathways and a willingness to make difficult but necessary changes, you may still have options to secure financing and make your homeownership dreams a reality. Ultimately, perseverance and knowledge are key when faced with today’s uniquely challenging housing market.
NEW YORK — Former New York Gov. David Paterson and his stepson were attacked in New York City on Friday night, authorities said.
The incident occurred just before 9 p.m. on Second Avenue near East 96th Street on the Upper East Side, according to the New York City Police Department.
Police said officers were sent to the scene after an assault was reported. When officers arrived, police say they found a 20-year-old man suffering from facial injuries and a 70-year-old man who had head pain. Both victims were taken to a local hospital in stable condition.
In a statement, a spokesperson for the former governor said the two were attacked while “taking a walk around the block near their home by some individuals that had a previous interaction with his stepson.”
The spokesperson said that they were injured “but were able to fight off their attackers.”
Both were taken to Cornell Hospital “as a precaution,” he added.
Police said no arrests have been made and the investigation is ongoing.
The 70-year-old Paterson, a Democrat, served as governor from 2008 to 2010, stepping into the post after the resignation of Eliot Spitzer following his prostitution scandal. He made history at the time as the state’s first-ever Black and legally blind governor.
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A 17-year-old boy was critically injured and a person is in custody after a gunman opened fire on a SEPTA bus in North Philadelphia Friday evening, police said.
At around 6:15 p.m., Philadelphia police were notified about a shooting on a SEPTA bus traveling on Allegheny Avenue near 3rd and 4th streets in North Philadelphia, Inspector D F Pace told CBS News Philadelphia.
There were an estimated 30 people on the bus at the time of the shooting, Pace said, but only the 17-year-old boy was believed to have been shot. Investigators said they believe it was a targeted attack on the teenager and that he was shot in the back of the bus at close range.
According to Pace, the SEPTA bus driver alerted a control center about the shooting, which then relayed the message to Philadelphia police, who responded to the scene shortly.
Officers arrived at the scene and found at least one spent shell casing and blood on the bus, but no shooting victim, Pace said. Investigators later discovered the 17-year-old had been taken to Temple University Hospital where he is said to be in critical condition, according to police.
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Through their preliminary investigation, police learned those involved in the SEPTA shooting may have fled in a silver-colored Kia.
Authorities then found a car matching the description of the Kia speeding in the area and a pursuit began, Pace said. Police got help from a PPD helicopter as they followed the Kia, which ended up crashing at 5th and Greenwood streets in East Mount Airy. Pace said the Kia crashed into a parked car.
The driver of the crashed car ran away but police were still able to take them into custody, Pace said.
Investigators believe there was a second person involved in the shooting who ran from the car before it crashed. Police said they believe this person escaped near Allegheny Avenue and 4th Street, leaving a coat behind.
According to Pace, police also found a gun and a group of spent shell casings believed to be involved in the shooting in the same area.
“It’s very possible that there may have been a shooting inside the bus and also shots fired from outside of the bus toward the bus,” Pace said, “We’re still trying to piece all that together at this time.”
This is an active investigation and police are reviewing surveillance footage from the SEPTA bus.