Obtaining a mortgage is one of the most important things you will likely need to do to purchase a home. Mortgages can cover over 85% of the cost of your home, depending on your lender. They are fundamental in helping people purchase their dream home. Unfortunately, sometimes borrowers will be denied the mortgage they need to afford the home. So why were you turned down? And does that mean you can’t afford your home now?
Why Were You Turned Down For A Mortgage?
There are a few reasons why you may have been turned down for a mortgage. Especially if you are a first time home buyer, you are more likely to be turned down compared to an existing homeowner.
When you have a poor credit history or no credit history, you may be denied a mortgage. This is because some lenders will see it as a risk to lend to you not knowing if you’ll be able to pay it off. There are lenders like Morgix who are experts at managing applicants with bad credit.
If your income is not seen as sufficient to pay off a mortgage each month, you will be denied.
Debt too high
Part of a mortgage application takes into consideration all of your debt against your total income.
If you cannot prove where the funds came from and that this was a legitimate source, then you likely will be denied. All lenders are required by Anti Money Laundering protocols to ask where the initial funds originate. Lenders have full authority to reject any payments they believe to be suspicious. Avoid this by coming prepared with receipts or letters if the money was a gift.
Don’t be discouraged, by taking a few extra steps, you can still afford your dream home!
What To Do Next
In order to come up with a solution to your mortgage issue, you need to know what about your application was the reason you were denied. Speak with your lender and find out what the reason they denied you was. Once you determine exactly what the reason for your denial was, you can work on improving that section of your application.
Get a Cosigner
If your credit score was too low, you should look into getting a cosigner for your mortgage. A cosigner agrees to take on responsibility for your mortgage payments if you cannot pay.
Increase your down payment
By increasing the amount you pay upfront, you can decrease the amount a lender needs to risk, which can increase your chances of being approved.
Pay Off Some Debt
If debt is your problem, pay some of your debt off. This can help you build credit, and will lower your income to debt ratio.
Speak to a Different Broker
Finally, try speaking to a mortgage broker who can help you get approved with a different lender entirely. Mortgage brokers have access to hundreds of public and private lenders, this makes it easy to get the amount you need. If you were rejected for credit or debt reasons, look for a broker with experience and knowledge with bad credit lending.
Call Morgix today and let our team find you the mortgage you need regardless of your bad credit history or denial. Get started by contacting the team today!