Sometimes it's not a question of getting turned down. It's just that the loan you applied
for may not be the loan you are ultimately approved for. The mortgage lender may offer a
different program or a counter offer. Or, the lender may grant the loan, but with certain
conditions to be met prior to closing.
What to Do If the Loan is Denied:
- Find out why. The lender has 30 days from your submission of a completed application
to explain in writing why the loan was turned down. You will receive an adverse action
notice stating a specific reason for the denial. The notice will also tell you which federal
agency to contact if you think the lender or mortgage broker has illegally discriminated
against you.
- Many of the reasons for denial can be corrected over time. These may include
insufficient money for a down payment, excessive debt or a poor credit history. Once your
financial situation or credit profile has improved you can apply again for a
loan.
- If a poor credit history was the reason you were denied the loan, you are entitled to a
free copy of your credit report. You also have the right to dispute the accuracy or
completeness of any information in your credit report. If you dispute any information, the
credit reporting agency that prepared the report must investigate free of charge and notify
you with the results of the investigation. For more information, see the bankrate.com
special report, Your Credit: The
basics.
- Some lenders have a second level of review for loans, and you might request a second
opinion.
- Keep shopping. If you've been turned down once, don't automatically be discouraged.
Banks and mortgage companies set different criteria for mortgage approval based on their
business objectives. Another lender may be the right match for you.
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