You’ve had dreams of buying this home for you, and your family, for years. Whether it’s your first home or you’re upgrading, a new home is very exciting, and it can be devastating when the financing doesn’t work out. If you have been denied for a mortgage, here is what you need to do.

Ask why

It may seem too obvious, but many potential home buyers will not follow up with their lender to find out exactly why they were denied their mortgage. For the most part, lenders are more than willing to discuss the mortgage application and explain the reasoning behind the denial. If you don’t know why you’ve been denied, you won’t know how to start to fix it.

Improve your credit score

One of the most common reasons for being denied financing for home is due to a person’s credit score. This is probably not going to be a quick fix as it can take some time (years even in some cases) to repair and rebuild a credit score that is low. If this is your reason for being denied, you can work with your mortgage broker and lender to look at ways that you can go about accomplishing this.

Pay down debt

 Another common reason for being denied is that your debt-to-income ratio is too high. There are regulations lenders must follow in that they cannot lend out money if it’s going to put the borrowers above the maximum allowed thresholds. If your debt-to-income ratio is higher than 43%, you should really look at ways to pay down your debt.

For advice on doing this, you can reach out to your own personal financial planner to look at your budget and current income/cash flow to determine the best ways to go about this.

Increase your income

This may or may not be an option for everyone. If you are able to increase your income through getting a better paying job, or maybe taking on a second job to help increase the cash flow into your home then this could be a great way for getting approved for your mortgage.

Now you do need to keep in mind that your need to have a history of this income for a while, so it’s not as though you can take on a second job today and be approved tomorrow. You need to be able to prove that you have a history with this income.

Increase your down payment

If you can bring up the amount of down payment you have then you may be able to purchase a home because this is less that you have to mortgage. This can also work with your debt-to-income ratio because you will be borrowing less money which means your obligation in terms of a mortgage payment is less and you have more cash flow available each month.

Now you cannot borrow money to increase your down payment, as this will increase your debt service ratio and then you’ll have to pay it back. So don’t try to borrow more money to increase the down payment – this is an option if you were keeping more in savings to have a bigger emergency fund.

Contact Sure Loan for You Today

Have you been denied for a mortgage? Contact us today to speak to our mortgage team. We can examine your situation and help you explore ways to get approved.

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