CBS News
Was your mortgage loan application denied? 9 steps to take
Getty Images
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?
Find out how affordable the right mortgage loan could be today.
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.
Explore your top mortgage loan options and apply for preapproval now.
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.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
CBS News
Floods, landslides struck parts of Bosnia as residents slept, leaving at least 16 dead and several missing
A severe rainstorm struck Bosnia overnight Friday, killing at least 16 people in floods and landslides in several towns and villages in central and southern parts of the country, with surging waters rushing into people’s homes as they were sleeping.
Rescue services in the south said several people were missing and called on volunteers and the army to assist as roads were closed and houses left without electricity.
Josip Kalem, a resident of Fojnica, one of the towns hit by the floods, said his dog’s barking woke him up at around 4 a.m. When he came out on the terrace, he saw the water rising rapidly.
“I came down, woke up my wife, and we looked around, we could not get out of the house. We saw more and more water coming in,” he said. “All of a sudden, the water was flooding the garage, basement, my car — everything. The water swept it all away, including my dog. Flood took it downstream.”
Andja Milesic, another resident of Fojnica, also said she was caught by surprise in the middle of the night.
“When I woke up, my bedroom floor was already soaked. I walked into the hallway — water was everywhere — the living room, everywhere,” she said. “It was horrible.”
Armin Durgut / AP
Darko Juka, a spokesman for the local administration, said at least 14 people had died in and around the southern town of Jablanica. Officials later said two more bodies have been found.
“Those are the ones who have been discovered by rescuers,” he said. “We still don’t know the final death toll.”
“I don’t remember such a crisis since the war,” Juka said referring to the 1992-95 war in Bosnia that left the country in ruins. “The scale of this chaotic situation is harrowing.”
Defense Minister Zukan Helez told N1 regional television that troops have been engaged to help and that the casualties were reported.
Helez said that “hour after hour we are receiving news about new victims. … Our first priority is to save the people who are alive and buried in houses where the landslides are.”
A pregnant woman lost her baby after she was rescued from the floods and transferred to a hospital in the regional center of Mostar. Authorities said doctors were fighting for her life as well. Separately, a child was successfully rescued and hospitalized, local officials said.
Rescue services in the towns of Jablanica and Kiseljak said the power was off overnight and mobile phones lost their signal.
The Jablanica fire station said that the town was completely inaccessible because roads and trainlines were closed.
“The police informed us that the railroad is also blocked,” the state rescue service said in a statement. “You can’t get in or out of Jablanica at the moment. Landline phones are working, but mobile phones have no signal.”
It urged people not to venture out on the flooded streets.
Human-caused climate change increases the intensity of rainfall because warm air holds more moisture. This summer, the Balkans were also hit by long-lasting record temperatures, causing a drought. Scientists said the dried-out land has hampered the absorption of floodwaters.
Armin Durgut / AP
Drone footage broadcast on Bosnian media showed villages and towns completely submerged under water, while videos on social networks showed dramatic scenes of muddy torrents and damaged roads.
One of the busiest roads linking Sarajevo with the Adriatic coast via Jablanica was swept into a river, together with a railway line in a huge landslide, according to photos.
“Many people are endangered because of big waters and landslides. There is information about victims and many injured and missing persons,” said the civic protection service.
Authorities urged people to stay on the upper floors of their homes. Reports said surging waters swept away domestic animals and cars as the water swiftly filled up lower floors of buildings.
The heavy rains and strong winds were also reported in neighboring Croatia, where several roads were closed and the capital of Zagreb prepared for the swollen Sava River to burst its banks.
Heavy winds have hampered traffic along the southern coast of the Adriatic Sea, and flash floods caused by heavy rain threatened several towns and villages in Croatia.
Floods caused by torrential rains were also reported in Montenegro, south of Bosnia, where some villages were cut off and roads and homes flooded.
In 2014, floodwaters triggered more than 3,000 landslides across the Balkans, laying waste to entire towns and villages and disturbing land mines leftover from the region’s 1990s war, along with warning signs that marked the unexploded weapons.
Trump to hold second rally at site of attempted assassination
Eye Opener: At least 70 people killed in gang attack in Haiti, United Nations says
Floods, landslides struck parts of Bosnia as residents slept, leaving at least 16 dead and several missing
Trump to hold second rally at site of attempted assassination
Eye Opener: At least 70 people killed in gang attack in Haiti, United Nations says