What to Do if Your Mortgage Got Turned Down
Getting your mortgage rejected can be hard to get over ..
if you're just beginning your home search or bidding on the next place you're staying. You'll probably run through possible reasons the bank turned down your loan and some tips on how to deal with it. However, if you've been rejected for a mortgage, you may be more inclined to give up and move on.
In Canada, getting a mortgage loan is not as easy. After all, mortgage financing in Canada requires:
A good credit score
Enough money saved for a down payment
A stable job and income
The ability to meet the terms and conditions of the mortgage lender's loan agreement
If you're one of the unlucky ones who has been rejected for a mortgage, you must identify first why your mortgage loan was denied.
Reasons Your Mortgage Was Rejected
Low Appraisal. A home appraisal determines the amount of money the lender is willing to loan you based on the home's current market value. If the assessment values your home less than the amount the lender is willing to lend you, your mortgage loan application will be denied.
No Steady Income. Mortgage financing requires a stable income. The lender might not be prepared to offer you the money to buy a property if you've previously had low or no income.
Inability to Meet Credit Requirements. Your credit score is one of the most important factors in approving a mortgage loan. If you have poor credit, your mortgage loan application will be denied.
Too Many Debt Payments. If you have too many outstanding debt payments, your lender will not likely approve your mortgage loan application.
How Frequently Do Underwriters Reject Loans?
Many things can go wrong when purchasing a home, so you're not alone if you think it's a disaster to get denied. In fact, getting your mortgage declined occurs more often than you think.
In most cases, if you've made a mistake in your credit history or have too many outstanding debts, your lender will not approve your mortgage loan application immediately. However, remember that getting your mortgage denied is not the end of the world—plenty of other options are available.
Steps to Take After a Mortgage Loan Is Denied
First, you must evaluate the situation carefully. Mortgage financing in Canada is available to those who meet the required criteria, so don't be discouraged if you're denied. Next, try to get pre-approved for a mortgage. This will give you an idea of the size of the mortgage you may afford and help you better plan your finances.
Another way is to look into refinancing your mortgage. This can be a more expensive option, but it could be worth it if you can get a better interest rate or if you're able to pay off your current mortgage in a shorter amount of time. Finally, consider other options, such as taking out a home equity loan or borrowing money from a family member.
THE BOTTOM LINE
It is important to understand your options if you have been turned down for a mortgage. You may get a loan from a different lender or a home equity line of credit. Finding a mortgage refinance or a home equity loan is also possible. You may want to consider selling your home if you cannot get a mortgage.
Do you want to learn more about mortgage financing in Canada? Level Up Mortgages assists homebuyers and homeowners in purchasing or refinancing new homes. Get in touch with us today to see how we can help!
See what you qualify for or contact Paul to get your pre-approval.
Paul Davidescu (www.levelupmortgages.com)
Level Up Mortgages
604-809-3188
paul(at)levelupmortgages.com
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