What to Do If a Mortgage Lender Rejects Your Application?

A mortgage lender rejecting your home loan application might feel as if you've been kicked in the stomach. You've diligently prepared for the buying experience -- or at least you thought. Mortgage lenders vary in what they require from mortgage borrowers. Yes, you may have every intention of paying your mortgage loan on time each month. But regrettably, intent isn't enough to qualify for a mortgage. Lenders take many other factors into account. Instead of sulking and feeling sorry for yourself, take action and get your application approved.

Speak Up and Ask

You have the right to know why the lender rejected your application. Some lenders volunteer this information, while others might send a formal rejection letter with no explanation. Call the lender, speak to a mortgage officer and ask for specific information on why the lender rejected your request.

Be Objective

You may understandably feel angry and outraged by the rejection. But once you've spoken to the lender, try to take an objective approach. Recognize the lender's standpoint and put yourself in the company's shoes. Would you approve the loan request if you worked for the bank?

Develop a Game Plan

Perhaps now isn't the right time for you to buy, or maybe you can't afford a particular amount. Whatever the reason, a mortgage loan rejection doesn't close the door on homeownership. Yes, you'll have to delay your plans. However, postponing a goal has never killed anyone. Be patient and decide the best way to proceed. For example, if a low credit score stopped the approval, aim high and strive for a score 680 or higher. The Home Loan Learning Center recommends this minimum rating for mortgage approvals. Do you carry excessive consumer debt? If so, perhaps now's the time to stop shopping and start saving. Work longer hours, pay more than the minimum, sell something or do whatever else it takes to lower your debt.

Alternative Lender

Conventional lenders might reject your mortgage loan application if you have a low credit score and less than five percent down. If eager to purchase a home and you don't want to wait, apply for FHA financing. Select a lender authorized to issue these types of mortgage loans. You can qualify with a 620 credit score and a 3.5 percent down payment.