Choosing Another Lender After Mortgage Application Denied
This guide covers how to choose another lender after a mortgage application denied. There are options for borrowers when mortgage application denied by a lender. Home-buying can be a roller coaster of excitement, nervousness, and anticipation.
All of those emotions are standard. However, when your mortgage application denied, a new breed of emotions takes over. You’re probably feeling panic, disappointment, and betrayal. Well, I firmly believe that no mortgage team intentionally denies an application.
Sometimes, an inexperienced loan officer will put you in a tough situation. In this blog, we will detail what steps to take if your mortgage application denied. It is important to stay positive during this time. In this article, we will discuss choosing another lender after mortgage application denied.
What To Do When Getting News Of Mortgage Application Denied
The first step you should take after the mortgage application denied is to gather all the necessary information. You must hound your loan officer for the exact reason for mortgage application denied. We received numerous phone calls from clients who have been denied by their current lender who cannot give us a straight answer as to why.
While we understand you are not a mortgage guideline expert, you have put your faith and trust in your current mortgage company. The least they can provide you is a clear-cut answer to your denial. It is best to get something in writing if possible. You may not contact the underwriter directly, but your loan officer should have the respect to provide you with a clear and detailed answer.
This is so important because you may be running into LENDER OVERLAYS. If your reason for the denial is an overlay, we can take your file over and still close the mortgage. Once you have the exact reason for your denial, please get in touch with us at Gustan Cho Associates at 262-716-8151. Text us for a faster response. Or email us at gcho@gustancho.com. After a brief conversation, we will be able to tell if you are running into a lender overlay or if your file needs to be denied. At this point, we will either start a new loan file at Gustan Cho Associates or let you know why we cannot help you. Even if you do not qualify today, we will create a customized financial plan to qualify immediately.
Getting Earnest Money Back After Mortgage Application Denied
If we cannot help you, follow this step if your mortgage has been denied. Do everything you can to get your earnest money back. This can be possible depending on how far along you are. Getting your earnest money back may be harder if you have passed your inspection waiting period. Important to know any money you have paid for inspections and appraisals will usually not be refunded.
Stress During The Mortgage Process After Mortgage Application Denied
There is nothing worse than getting a denial during the mortgage process. We do understand how stressful this can be. While we will do everything possible to help you obtain a mortgage, sometimes you do not qualify. It is important to select a lender with who you have constant communication.
If the appraiser has not physically gone to the property to complete the inspection, you can get your money back. It is important to request this in writing from your lender. If you were working with a real estate attorney, please put them to work. This is the reason you were paying them to fight on your behalf. You will want to return every penny to put into your next property.
You should be well informed on mortgage applications during the whole process. The Team at GCA Mortgage is highly skilled in difficult mortgage situations. We even have a TBD UNDERWRITING PROCESS to avoid mortgage denials later in the process. If your situation is a one-off scenario, we recommend utilizing this process. It can save you thousands of dollars in the long run.
Common Reasons For Mortgage Denial
Common reasons for mortgage denial. The most common reason borrowers are denied a mortgage is a lack of transparency during the mortgage process. Honesty is key. It is very important that you are honest with your loan officer and your loan processor. Clients who may have had a derogatory item in the past and choose not to bring this to their loan officers’ attention are only doing themselves a disservice.
Tax liens and judgments no longer report to the credit bureaus, so your mortgage team will not know about these for a few weeks.
Once you start the mortgage process, a third-party verification that scrubs public records will be ordered. During this third-party search, this information will show up. It is important not to hide anything from your mortgage team. Underwriting guidelines are strict, and derogatory information will be found during the process. You and your lender are on the same team, you have the same common goal.
Getting Mortgage Application Denied Due To Short of Funds For Cash To Close
Another common reason for mortgage denial would be a lack of funds for the down payment, closing costs, and reserves. In the mortgage industry, documentation for assets is important. All funds for the down payment, closing costs, and reserves must be verified and from an acceptable source. Clients who deal with cash are in a tough situation. Your funds must be documented, cash is very difficult to document.
If you plan on using cash as part of your down payment or closing costs, you must be very upfront with your loan officer. Typically, you will need documentation showing where you received this cash.
We do understand that life happens during the mortgage process. If you need to make a large purchase, please get in touch with your loan officer before doing so. Not having enough funds to close will result in a denial.
Taking Out New Debt During The Mortgage Process
Taking out new debt. Acquiring new debt during the mortgage process can be a deal killer. All debts taken out will be counted against your debt-to-income ratio. The mortgage lender will complete a credit refresh and count any additional payments even if they are obtained after your initial credit report is pulled. Dale Elenteny says the following about getting mortgage application denied:
It is very important that you do not have your credit checked during the mortgage process, and if you need to, please let your mortgage team know. You want to ensure you can afford the additional payment and not lose your home.
If you’ve had a chance to read our other blogs, you will understand we have seen many unique situations over the years. Many of our clients have had their mortgage application denied by their current lenders. We can help borrowers after they get their mortgage application denied. We can still get them closed. Please check out some of our reviews. Our loan officers are highly skilled when it comes to guidelines. Please check out our YouTube CHANNEL to stay up-to-date with the changing mortgage guidelines.
This blog on how you choose another lender after mortgage application denied was updated on June 30th, 2023.
