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LESSON 19: WHAT IF I GET TURNED DOWN?
(continued from previous page)
Keep shopping. If you've
been turned down once, don't give up. Banks and mortgage companies
set different criteria for mortgage approval based on their business
objectives. Another lender may be the right match for you.
If these steps don't work, you may have to consider
an unconventional
loan or subprime
loan. As we discussed earlier, there are loan programs that
have easier qualifying standards than conventional mortgages. These
work for borrowers who have special circumstances that can preclude
them from getting the best-priced loans.
Some of these circumstances include:
• Holding your current job for
less than a year
• Having a few late payments
on your credit report
• Having less than 20 percent
of the home's purchase price for a down payment
• Being self-employed
• Purchasing a condominium in
a building that either isn't close to being completed or has a large
percentage of owners who rent their units out rather than live in
them
If you are denied for a conventional mortgage and
you fit one of these profiles, ask your lender about potential alternatives
such as "no-doc"
loans, which don't require borrowers to provide financial statements,
and subprime mortgages. You may have to pay a higher rate, put more
money down or accept other conditions, but at least you'll still
be able to buy a home!
 Many
people think a person who has declared bankruptcy can't
qualify for a mortgage. Actually, there are options for
people who have filed bankruptcy, including "no-doc"
or subprime loans.
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Many of the
reasons for denial can be corrected over time. These may
include insufficient money for a down payment, excessive
debt or a poor credit history. Once you've saved up more
money, paid down your car loan or found a new job that pays
more, you can apply again.
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