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After all of the home buying research, planning and preparations, there’s nothing tougher than learning your loan was rejected. But instead of simply giving up, here are a few actions we Denver real estate agents encourage our clients to take:
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Review Your Case for Possible Exceptions
If you weren’t approved because of a bad (but understandable) credit score, write a letter for reconsideration. Just stick to the facts: explain the unusual situation which caused the score (e.g. an unexpected medical procedure, divorce or etc…). Don’t insert emotional pleas as they can come off manipulative or melodramatic. Keep your letter’s tone polite and professional. With a little effort, your lender may advocate for you even harder the second time.
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Re-Assess Your Financial Situation
Like any disappointing moment in life, you can grow wiser from this experience. So instead of giving up, create a plan to help you succeed the next time you apply. Re-review the loan and ask yourself questions like, “Did I apply for a loan greater than what I could realistically afford?” Remember your real estate expenses will include much more than the mortgage (like home improvements and appliances). You may have overlooked this, but your lender didn’t. Ask your Denver real estate agent and lender for their feedback.
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Consider Finding a Loan Partner
The cliche applies here: “two is better than one.” Having a family member or friend sign as a guarantor can greatly improve your application. Be sure you select someone with at least a better credit score than you.
Just remember your chance at purchasing a home is far from over. Loan rejections are common. Any Denver real estate agent can share with you stories of “loan redemption.” The key is to keep preparing to own a home. Whether you decide to follow these tips or focus on improving your finances, you will be more prepared then next time you apply!
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Interested in discussing your loan application?
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Visit RE/Max of Cherry Creek’s blog.
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