When you are all set to buy a home you always wanted and come across loan rejection letter. This seems to be quite frustrating and it may also disappoint you. Just because your loan application was rejected today that does not mean you will never qualify for a mortgage loan. There is a wide range of other options and services such as Fort Lauderdale Auto Equity Loans to apply for. There is always a way out and there are certain steps that you can take in order to improve your chances to move forward.
Know the Reason for Rejection
The reason for your loan application rejection should not be a surprise. When you apply for a loan and it is denied the lender is supposed to provide you the reason for the denial. Often the lenders should mention the reason for rejection in the denial letter. But when there is no reason mentioned, you should ask lenders to give an appropriate reason for it. This will help you to verify the issues that you were denied for and work on them.
Review Your Credit Score
Your credit score is an important factor that determines your eligibility to get types of loans and rates. Ensure to review your credit score, because even if you have a clear ground, lack of credit score will drag down your rating. Scores under 540 make lenders nervous to approve you a mortgage loan. You can pay off your credit card debts and pay all your bills on time, this will gradually improve your credit score.
Check Debt-to-Income Ratio
The sum of all the monthly payments on the loans you carry divided by your monthly income is the debt-to-income ratio. Lender or bank will consider your debt-to-income ratio that determines your eligibility to get a mortgage loan. They expect your monthly debt to exceed no more than 43% but if it is more than that, you might get a denial. There are chances to improve debt-to-income ratio by reducing the monthly payments.
Consider Appraisal Errors
The amount of loan a bank will lend you directly depends on the value of your property as collateral. When you have a property appraisal, its results can be critical. The value of your home appraisal should not be lower than the amount you want to borrow. If the appraisal value turns out to be lower than the lender may deny your application. You should consider having multiple appraisals and communicate with appraisers to ensure accurate results.
Go for Auto Equity Loans
If you get a denial letter from one lender, there is always another way out. There are other lenders in the market who do not consider your credit score to approve the mortgage loan. Auto equity loan is one of the most reliable forms for a bad credit score. The advantage of an auto title loan is that you can drive your vehicle used as collateral while making loan repayments. It is just that you need to share the title of your vehicle with a trustworthy lender.
Re-Apply for Mortgage
After examining all the factors when you get to know what the issue of mortgage loan rejection is you can take this step. When you rectify the errors and fix your credit score now you are eligible to re-apply for the mortgage loan. Moreover, it is also recommended to take the help of mortgage expert while re-applying to get the mortgage loan.
Therefore, these were the steps you can consider and make according to adjustments to get an approval letter and buy a house of your dream.