Home Loan Denied? UHL Solutions Are Here!
What Happens If Your Home Loan Gets Denied?
While it doesn’t happen often, sometimes a home loan lender turns down a potential borrower’s request for a mortgage in Illinois. While it’s even rarer for those decisions to be changed, understanding what happened and why help from United Home Loans can ensure the same problem doesn’t happen again.
What Happened During The Home Loan Approval Process?
When a mortgage lender turns down a request for a home loan, it will usually offer you an “official” reason. Perhaps you have bad credit. Or maybe there were problems with the house you wanted to purchase. Or your proposed down payment wasn’t large enough. If you do a little more digging and talk to your expert mortgage representative from United Home Loans, you can typically gain more information about why the lender turned you down. What you do with that information can be the difference between success and failure the next time you apply.
The Reasons Your Illinois Home Loan May Have Been Denied
Here are some common reasons why banks turn down mortgage applications—and some steps you can take to solve them.
-Poor credit. Most home loan lenders like your credit scores to be in the mid-600s or higher. If your scores are lower, you should request copies of your credit reports from the three major credit reporting agencies, Equifax, Transunion and Experian. Each one must provide you with a free credit report once each year.
Check the report to see if you can spot what is lowering your credit score. Perhaps there is a mistake you can correct. Or maybe you have too much credit card debt. Or you have been late on credit payments. It’s important to take steps now to improve your score so it won’t be a problem the next time you apply for a mortgage.
-Problems with the house. Sometimes it isn’t you, it’s the house. While there is little you can do if the lender had a problem with the house itself, understanding the difficulties will make you a more careful buyer in the future. If the property appraised too low or is located in a flood zone, the best advice is to make sure the next property you want to purchase doesn’t have those problems. Put together a list of questions to ask prospective sellers about their homes. Having this information ahead of time means you won’t even bother making an offer on a “problem” house.
-Low down payment. Since the 2008 financial crisis, the days of putting little or nothing down to buy a house are long past. Most lenders ask for a minimum of 10% and prefer 20% of the purchase price. If you haven’t saved enough, perhaps it’s better to wait a few years before buying a home so you have time to save enough to meet lender requirements.
-Low income. Most lenders require that the total of principal, interest, property taxes and homeowner’s insurance not exceed 28% of your monthly gross income. If the amount you wanted to borrow caused you to exceed that percentage, you have two choices: buy a less expensive home or wait until your income increases. Your best option may be to wait a few years until you are earning more or have better paying job.
Consult United Home Loans
Because different mortgage lenders have different rules, sometimes you can get the mortgage you need simply by choosing another lender. But before you go to the expense of searching for a variety of lenders, why not contact United Home Loans? Talk with one of our professional and experienced mortgage representatives and share information about the loan you need and the property you want to purchase. Although there are no guarantees, many of our representatives may be able to tell you if United Home Loans is likely to approve you for you next home loan in Illinois.
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