Reject Rejections To Your Application For Home Mortgage Refinance
If you're in the process of refinancing your home loan, rejection has likely been thrown around at you a time or two already. But what does rejection actually mean? Just because someone says "no" doesn't necessarily mean no is final. We'll take a look at where to go from here.
Home mortgage refinance veterans will be familiar with the term "rejection." If you've submitted your application for a home mortgage refinance and have received an answer that says something like, 'We're sorry but due to system error we were unable to process your loan request' then this means that your application was rejected by the bank's computer system. Since the bank's computer system is connected to the world wide web, you can call or email your loan officer and he or she will be able to assist you with processing a new application.
Since every lender's online application has a different purpose, your home mortgage refinance application may be rejected for a variety of reasons. If you are prepared to find out why your application was rejected and what can be done to change things so that you can get approved, then this article will help you through the process.
How To Reject Your Home Mortgage Refinance Application
When you receive an automatic rejection from your home loan company, that doesn't necessarily mean it's time for rejection overload with other banks or brokers. It's always a good idea to talk to your loan officer at the bank or mortgage broker you're working with, especially when the bank has given you a reason for rejection.
Listening to what the bank has to say might be just what you need in order to get your application approved. If you don't request any information from your lender and make an automatic decision to try another company, this is probably going to end back up in rejection again.
Here Are Some Common Rejection Reasons:
• Missing Work Related Documents: A missing employment letter can result in a rejection for many lenders. If the bank requires documentation proving that you have been gainfully employed for the past two years, it's worth contacting them to see if any other type of documentation can be accepted in lieu of this proof.
• Missing Federal Tax Returns: The same goes for income tax returns. If you have been out of the country or otherwise unable to furnish these documents, it is still worth a phone call to find out if they can be accepted in an alternative format like an accountant's update or other proof of income.
• Unacceptable Debt Load: If your debt-to-income ratio is greater than 45% then it's going to be extremely difficult to secure a loan with this type of debt load. A better solution is to work on lowering your debt load by applying for more deferment and forbearance.
• Unacceptable Credit Score: If your credit score is lower than 600 then you are going to want to get this number up as quickly as possible. The best way to do this is by taking out a home equity line of credit that will allow you access to funds for large purchases such as refinancing.
• Ineligible for a Mortgage Program: This can be caused by any number of factors from not being a citizen of the United States, not having enough money in your bank account or having a deceased spouse listed on the home loan application. Although these are all valid reasons, it's worth a phone call to find out if you can correct these things and be eligible to move forward.
• Unacceptable Appraisal Costs: The lender may not accept your appraisal costs if they are too high. This could be because of your loan-to-value ratio or other factors such as the property being located on a remote island that is difficult to access. In any case, it might be worth contacting the lender to see if they have any suggestions on how you can lower your appraisal costs.
• Unacceptable Certificate of Occupancy: This can be caused by any number of things from an expired certificate of occupancy to an incomplete application. If you have problems with the appraisal costs or certification process, contact the bank and they might be willing to accept another solution such as a lower loan-to-value ratio.
• Unacceptable Debt: Not all banks are looking for a perfect credit score when considering a home mortgage refinance. It is often the case that they are willing to accept a lower credit score if there is sufficient collateral available in the form of some type of property or stock in addition to your checking account.
• Unacceptable LTV Ratio: The loan-to-value ratio is the amount of money borrowed compared to the value of the property being purchased. A higher LTV ratio means that you are borrowing too much money out of your home in order to buy a house with a sound property value. Contact your bank or mortgage broker and see what options you have available to make your loan more attractive to them.
• Unacceptable Income: Not all lenders are looking for a good income, they are looking for a good credit score. If your credit score is very low, then it might be best to find another lender that is more willing to take on your loan.
• Unacceptable Property Title History: There are many types of property history that can cause a loan officer to reject your application. If you submitted copies of a deed and mortgage but do not have the originals, this will cause an automatic rejection. If a bank or mortgage broker feels that they cannot prove that the property has been protected under adverse fire conditions then they will also automatically reject the loan request.
• Unacceptable Mortgage Plan: This is where things like refinancing into a shorter term or refinancing into another type of plan could be considered. For example, if you're currently paying a 15 year level payment plan and the bank is only willing to accept 30 year level payment, it's worth it to move the application forward and see what they say.
• Unacceptable Lender Restrictions: Many lenders have restrictions on who they will lend money to based on their credit score, employment history, or other factors. If you feel like these restrictions are not being applied in an equal manner and can be lowered then it might be time to contact the lender and find out how they feel.
• Unacceptable Qualification Reasons: Qualifying reasons are usually related to income and debt-to-income ratios. The main reason a lender might reject your loan application is because they feel that you are not able to handle the loan. If they feel that you aren't able to pay back the loan then they can reject your loan.
• Unacceptable Affordability: Mortgage lenders need to feel that a home loan will not increase the amount of money it takes to own the property. This is usually based on current affordability and future affordability, but it can be as simple as how much money you are currently making.
• Not enough time: Most banks require a minimum amount of time in which you have been employed and have maintained a stable employment history with a decent number of years in service before being eligible for a home mortgage refinance.
Conclusion:
• If your income is not high enough then it might be useful to contact a lender and ask them if there is any way that you can increase your income. They can also help you find other ways to earn additional money.
• If you want better credit, bonuses, and benefits then it might be best to look for other potential opportunities that are available to you.
• If your debt-to-income ratio is too high or if your credit score is too low, then it might be worth considering another bank or mortgage broker that will more readily accept these situations.
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