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Been thinking about refinancing your home mortgage loans?You’re not alone: An industry group recently announced loan applications increased by 1.3% last week for refinancing and home purchases, despite raised interest rates, reports Housing Wire.
So if you apply and end up with a rejection letter, don’t give up. Here’s what you need to do:
The first thing you should do is find out exactly what happened.
The Equal Credit Opportunity Act requires lenders to provide applicants with specific reasons in writing within 30 days explaining why they’ve been turned down.
Next, make an appointment to speak with your loan officer about your application. Ask him or her to specifically point out the weaknesses since the problem could be something as trivial as you being a couple of thousand dollars away from the amount your loan officer is comfortable with. In this case, you’ll know to save up before you apply again.
If you find there was a problem with your credit report, your loan officer is required to give you the name and address of the credit agency that was used. You’re entitled to a copy of this report within 60 days of your rejection so inquire about it as soon as possible.
And if your credit score is merely a couple points off, find out what you need to do to raise it. This could be as easily solved as paying off a credit card bill.
If you’re trying to purchase a home and your loan application was rejected due to insufficient income, you should consider other loan programs, specifically those for borrowers in lower income brackets, such as a Federal Housing Administration loan or Veterans Affairs loan. These loans typically have less stringent requirements.
All lenders have have different approval standards, so be sure to make yourself aware of all your options.
If you really want the house, you can renegotiate with the seller for a lower purchase price and therefore, a lower loan amount, or see if an additional down payment will be accepted to cover the difference between the appraised and purchase prices.
When you’re aware of what’s keeping you from an approved loan application, reapply for another one with a different lender or company, but make sure you’re not applying for more than four or five loans in a six-month period.
Also, if you suspect your loan was wrongfully rejected, report it to the Federal Trade Commission at www.ftc.gov or by calling toll-free 1-877-FTC-HELP.