If you are struggling to get a loan from a bank, don’t panic. There are options for you and things that you can do to improve your chances of getting a loan to go through. Take these few points to mind and it will help you out quite a bit.
Get a Cosigner
If your income isn't high enough to qualify for the loan you need and if you can find a cosigner with enough disposable income, part of that person's income can be considered toward your loan amount regardless of whether the person will actually be living with you or helping you pay the bill. In some cases, a cosigner may also be able to compensate for your less-than-perfect credit. Overall, the cosigner is guaranteeing the lender that your mortgage payments will be paid.
Wait
Sometimes conditions in the economy, the housing market or the lending business make lenders less generous with loans. If you're in a climate where everyone is panicking, then it may be best to wait things out. When conditions improve, lenders may become more accommodating. In the meantime, you can work on improving your credit score, reducing your debt and increasing your savings. While you're waiting, home prices or interest rates could drop. Either of these changes could also improve your mortgage eligibility.
Set Your Sights on a Less-Expensive Property
If you can't qualify for the amount of mortgage you want and you aren't willing to wait, switching to a condo or townhouse instead of a house, accepting fewer bedrooms or bathrooms, or moving to a less attractive or more distant neighborhood may give you more options. As a more drastic option, you could even move to a different part of the country where the cost of home ownership is lower. When your financial situation improves down the road, you might be able to trade up to the property, neighborhood or city where you hope to end up.
Ask the Lender for an Exception
Believe it or not, it is possible to ask the lender to send your file to someone else within the company for a second opinion on a rejected loan application. In asking for an exception, you'll need to have a very good reason, and you'll need to write a carefully worded letter defending your case. Your letter should focus only on the facts. Explain how the incident that is preventing your loan from being approved, such as a charged-off account, was a one-time event that will never occur again.
Try a Different Lender
Sometimes one lender will say no while another will say yes. If the first lender you approach rejects you, there's no reason not to try out a few other options. If every lender rejects you for the same reason, though, you'll know that it's not the lender that's the problem, it's your financial situation. Your only choice at this point is to fix the problem. When shopping for a second opinion, don't give lenders any reason that you are feeling even remotely desperate for a loan or they may take advantage of you by tacking higher fees onto your loan or raising your interest rate. Of course, if you are a higher-risk borrower, you may encounter some of these fees no matter what.
Team Up With Someone Else
Two incomes are better than one, so if you can't qualify on your own, perhaps you have a family member or friend that you trust enough and like enough to make a major purchase with and live with. It won't be enough to just put them on the loan, of course. They'll need to actually help with the mortgage payments to make it work, and chances are they won't want to pay half the mortgage unless they're living in the new home with you.
To go from rejected to preapproved, it's important to know what lenders are looking for in an applicant. If you've been turned down for a mortgage, make sure to ask the lender plenty of questions about things you could do in your specific situation to make yourself a more attractive loan candidate. With time, patience, hard work and a little luck, you should be able to turn the situation around and become a residential property owner.
If you are struggling to get a loan from a bank, don’t panic. There are options for you and things that you can do to improve your chances of getting a loan to go through. Take these few points to mind and it will help you out quite a bit.
Get a Cosigner
If your income isn't high enough to qualify for the loan you need and if you can find a cosigner with enough disposable income, part of that person's income can be considered toward your loan amount regardless of whether the person will actually be living with you or helping you pay the bill. In some cases, a cosigner may also be able to compensate for your less-than-perfect credit. Overall, the cosigner is guaranteeing the lender that your mortgage payments will be paid.
Wait
Sometimes conditions in the economy, the housing market or the lending business make lenders less generous with loans. If you're in a climate where everyone is panicking, then it may be best to wait things out. When conditions improve, lenders may become more accommodating. In the meantime, you can work on improving your credit score, reducing your debt and increasing your savings. While you're waiting, home prices or interest rates could drop. Either of these changes could also improve your mortgage eligibility.
Set Your Sights on a Less-Expensive Property
If you can't qualify for the amount of mortgage you want and you aren't willing to wait, switching to a condo or townhouse instead of a house, accepting fewer bedrooms or bathrooms, or moving to a less attractive or more distant neighborhood may give you more options. As a more drastic option, you could even move to a different part of the country where the cost of home ownership is lower. When your financial situation improves down the road, you might be able to trade up to the property, neighborhood or city where you hope to end up.
Ask the Lender for an Exception
Believe it or not, it is possible to ask the lender to send your file to someone else within the company for a second opinion on a rejected loan application. In asking for an exception, you'll need to have a very good reason, and you'll need to write a carefully worded letter defending your case. Your letter should focus only on the facts. Explain how the incident that is preventing your loan from being approved, such as a charged-off account, was a one-time event that will never occur again.
Try a Different Lender
Sometimes one lender will say no while another will say yes. If the first lender you approach rejects you, there's no reason not to try out a few other options. If every lender rejects you for the same reason, though, you'll know that it's not the lender that's the problem, it's your financial situation. Your only choice at this point is to fix the problem. When shopping for a second opinion, don't give lenders any reason that you are feeling even remotely desperate for a loan or they may take advantage of you by tacking higher fees onto your loan or raising your interest rate. Of course, if you are a higher-risk borrower, you may encounter some of these fees no matter what.
Team Up With Someone Else
Two incomes are better than one, so if you can't qualify on your own, perhaps you have a family member or friend that you trust enough and like enough to make a major purchase with and live with. It won't be enough to just put them on the loan, of course. They'll need to actually help with the mortgage payments to make it work, and chances are they won't want to pay half the mortgage unless they're living in the new home with you.
To go from rejected to preapproved, it's important to know what lenders are looking for in an applicant. If you've been turned down for a mortgage, make sure to ask the lender plenty of questions about things you could do in your specific situation to make yourself a more attractive loan candidate. With time, patience, hard work and a little luck, you should be able to turn the situation around and become a residential property owner.