Shopping for a new home can be exciting. Unless, of course, you get denied a mortgage. If that has happened to you, don’t panic. There are ways to fix the problem. Here is what you should do.
Find the Reason
First find out why you were denied a mortgage. As USA Today notes, under federal law, lenders must inform you if credit impacted the mortgage denial. The main credit-related reasons for getting rejected are:
Fix What You Can
If credit was an issue, take steps to remedy the problem. Low credit scores can be fixed by paying down debts, making timely bill payments and fixing any incorrect info on your credit report. If you don’t have enough credit history, keep using your credit cards and paying them off each month. Time is your friend here. You want the lender to see that you are capable of making payments for the long haul. Use a credit simulator to see what actions you might be able to take to help improve your score.
Remember that not all lenders are created equal. Just because you were denied a mortgage at one lender doesn’t mean you’ll get denied at all lenders. After you’ve taken steps to fix any potential credit issue, shop around to find the best deal for you. One loan denial is not the end of the world. Take time to fix the issues and you’ll be back house shopping in no time.