Mortgage Advice

Steps to Take After Getting Denied for a Mortgage

October 2, 2015

You’re in the market for a new home and you find the perfect bungalow in a great neighborhood. Excited and ready to sign on the dotted line, you meet with a mortgage officer to begin the approval process. To you’re surprise, you receive word that you’re denied approval for a mortgage.

What now?

Ross Mortgage understands the struggles of obtaining a mortgage in what is supposed to be a positive, life-changing experience; and we devise custom-built strategies to help those who have been denied.

If you’ve been denied for a mortgage, here are the steps you can take to turn that “no” into a “yes”.

Why Do People Get Denied for a Mortgage?

In order to get approved for a mortgage, it’s important to understand why people get denied in the first place.

For the most part, it all comes down to credit and income. If you’re getting denied for a mortgage based on income issues, it usually ties in with job history. In regards to the more common issue of credit, people can either have too low of a credit score, or (especially if you’re a first-time buyer) a lack of credit.

Getting Denied for a Mortgage Based on Income

Mortgage agencies use a guideline that states you must have a two-year job history in the same line of work. For example, say you’re an accountant and have been working in the industry for a little over a year. Then, a couple months later, you decide to quit that job and open up a landscaping company. You just started a new two-year window for yourself, and will be unable to get approval for a mortgage until you’ve been that small business owner for that time period.

But there are some exceptions. Say you’re a secretary in a real estate office, and then move to a secretary in a law firm. The two-year rule doesn’t apply there, since you’re still a secretary.

If you don’t have those two years, you need to make sure you properly move forward in your industry if you’re planning on applying for a mortgage.

Debt-Income Ratio

Some people may not qualify for the mortgage they want based on a disproportionate debt/income ratio. If this happens, a Ross Mortgage loan officer will take the time to crunch the numbers and figure out exactly which debts you need to eliminate in order to qualify.

We work with LoanBeam to analyze your cash flow by extracting data from your tax documents, which helps us create a custom financial strategy to ensure you get your ratio where it needs to be in as timely a manner as possible.

Getting Denied for a Mortgage Based on Credit

Credit guidelines are constantly changing, which is why it’s important to meet with a knowledgeable mortgage loan officer who can help you navigate through them. If your problem is a lack of credit, we recommend you have a minimum of three trade lines that you use regularly in order to establish credit effectively.

Paying Off A Collection

You are allowed to have collections on your credit report, but you can only have so many before the ratio ticks out of your favor. Ross mortgage officers can work with you to prioritize the debts you need to take care of before you can get approved. One of the most odd aspects of the mortgage process is paying off a collection. These days, if you pay off a collection it actually hurts your credit score.

The strategy we recommend is to pay off the collection right away so that the clock starts ticking for your score to come up. Then, follow your mortgage officer’s strategy for establishing credit in order to get approved in the fastest window possible. A good mortgage officer can adjust your credit and analyze your financial statements to get you to qualify in around 5-7 days (depending on what your credit issue is). Ross Mortgage is able to tell someone exactly how long it’s going to take, and lays out a custom-built financial strategy for you to follow.

When it comes to bankruptcies and foreclosures, the FHA has a ‘Back to Work’ program to help you. Ross Mortgage specializes in this, so talk to a loan officer to go over it with you if necessary.

People Helping People

One thing that Ross Mortgage brings to the table when it comes to the mortgage loan process is a people-first attitude. We’re small enough that we don’t need to operate with black-and-white, fixated guidelines, and we pride ourselves on having more industry knowledge than anyone. This allows us to execute creative, outside-the-box strategies that no other lender can do to help you qualify.

We spend thousands of dollars each year trying to help people qualify for their mortgage, without transferring that cost to the customer – which is something the bigger mortgage companies simply don’t do. Additionally, we offer tools to make the mortgage approval process simple and easy. Our Mortgage Pre-Flight program gives interested borrowers a safe and secure method to provide us with key information during the pre-approval process. This allows us to understand the options available to each borrower based on their credit score and help put them on the right path to getting approved.

Meet with a Ross Mortgage officer, follow our custom-built financial strategies, and you’ll be able to qualify for a mortgage in no time.