5 Tips for Resubmitting a Rejected Mortgage Application

rejected mortgage application

Buying a home can be one of the most emotionally exhausting purchases one will ever make in their lifetime. Home buying is a process that begins with the look, which then quickly moves to the romantic imagining of oneself in this home.

You imagine what color you’d paint the walls, you’d imagine how you’d outfit your garden; so the fact that the longer part of the home buying process, the bidding on a home and application for a mortgage can be time-consuming, clerical, and unromantic is the yin to the home buyers yang.

In truth you shouldn’t even look for a home until you are pre-qualified for a mortgage; it will save on the heartache later down the road if you are denied.

Here are five tips of things to do to be successful eventually, when you are, at first, rejected for a mortgage application.

1. Look at Your Home Price

Maybe one of the first things you should do when you’re rejected for a mortgage application is looking at the home you’re trying to buy.

If you’re making nine dollars an hour working part-time at Victoria’s Secret and your husband’s a student; you’re probably not going to get the best house, in the best neighborhood, on your pittance of income alone.

Consider looking elsewhere for a home in an up-and-coming, less expensive neighborhood.

2. Look at Your Credit Score

This is a no-brainer, but if you’re looking at a rejected mortgage application, maybe you need to look again at your credit score.

If there are glaring errors or other factual inaccuracies on your credit score, clean those up, get verification that they’ve been eliminated, and get back on the case of the mortgage company.

3. Look at Your Income

Again, if you’re talking about a home that is going to make you all but bankrupt just to keep up with the mortgage payments, then you might want to reimagine your home buying experience.

The general rule is that your mortgage should never account for more than 25% of your total income; that’s the money you’re taking in every week. So if you make $37,000 a year (net pay) that means that your mortgage should only be $771 or less a month.

Unrealistic expectations for a rising tide of home values and rising income is a lot of what took the housing market under in recent years.

4. Look at Your Unreported Secondary Sources of Income

If you only make $37,000 combined income on the books with you and your spouse, then that’s fine.

But if your mortgage amount on the house you want is more than that $771 dollars, you may need to figure the other ‘off-the-books’ sources of income you have.

If that includes working weddings for cash, your tax-free annuity settlement, or your scores of articles you write for Associated Content, that’s something you need to consider.

There are different ways of handling that income so you should speak to your real estate person about your specific situation.

5. Look at Other Sales in Your Immediate Area

If you are looking to move into a specific neighborhood and you’ve been told that you’ll need to pay at least $400,000 to live there, but you don’t qualify for that much mortgage, look towards other recent sales in the neighborhood; you may be surprised!

If other folks are snapping up homes for far less and you think you’d be able to qualify for mortgages of similar amounts, apply for that much and see if you can’t find the house to match.

Buying a home is an exhausting experience. If you get rejected on your first mortgage application, consider the five tips above and you could find yourself living the charmed life in the home of your dreams in no time!…

Using Mortgage Loan Modifications to Save Your Home

loan modification

A popular online topic is a mortgage loan modification. With the recession and unemployment highs, Americans are struggling more than ever to find ways of paying their bills.

RealtyTrac reported that this past week the number of US households facing foreclosure rose 32%. With numbers like this, many Americans are seeking help with the modification of their home loans.

Although there are qualified programs available, some homeowners are choosing to negotiate a modification with lenders themselves. Here are some tips for going about the negotiations.

Homeowners need to know their current financial position. They need to understand what their expenses are, what their income is and how much discretionary funding is available.

The lender will ask these questions and want to know what financial state they are being asked to work with. Owners who need guidance can contact the Consumer Credit Counseling office for a free financial analysis.

Next, homeowners should contact their lender with qualified information on what their part will be in the modification. If a homeowner has an extra $250 to contribute to monthly payments to get back on track, the lender may be willing to work with them. Remember that lenders want their money. That is their goal and they will work with customers if there is a viable plan to work with.

Lenders will require that homeowners have some plan of action. It’s best to have an answer ready for the lender and be able to justify the reasoning.

If a homeowner’s financial problems are temporary, they should tell that to the lender. It is possible to postpone payments, tack them onto the end of the loan and get the homeowner back on track.

The key here though is saved up funds as the next postponed payment date is coming. Consumers should use cut-backs, short term loans or tap into a nest egg to make sure they are well equipped to handle mortgage loan modification.

Homeowners with adjustable-rate mortgages are in particularly difficult situations when the rate goes up. Higher payments can make serious financial issues arise.

If a homeowner has an adjustable rate, call the lender and request a modification to a fixed rate. They should be ready, however, to present a plan as to how this is going to happen, however.

This is where they should be willing to get a second job, or better paying job, to show the mortgage company that they will be able to make the payments in the future.

In the end, the mortgage loan modification process may be the most viable option for saving a home. Lenders are willing to work with homeowners fairly, but there needs to be adequate communication and justification throughout the process.

All homeowners need to come to the negotiating table prepared with documentation including expenses, income, debt, and the proposed solution to the issue.

Being ready makes lenders more willing to listen and work with the customer. Mortgage companies want their money; they don’t necessarily want the property. And in today’s recessive economy lenders are more willing than ever to try to come to a solution for homeowners and help them save their homes.…