Going through the process of applying for a mortgage only for your application to get denied can be a frustrating and confusing time. If you’re hoping to buy your own home in the near future, it’s vital to secure financing or you risk missing out on a home that you may have been depending on getting.

In today’s post, we’re going to talk about what happens when your mortgage application is denied and what you can do to fix the problem as quickly as possible.

Determine the Cause of Denial

If your application is denied, priority number one needs to be to understand what happened. Since lenders are required to provide denied applicants with a letter explaining why they were denied, this just means reading the letter and making sure you understand all of the reasons listed.

There are a few common reasons that an application may be denied. Some of them are simple fixes, while others might require time and effort on your part that may delay your house hunt for a while.

One issue that many mortgage applicants have to handle is when their employer won’t provide proof of income to a mortgage lender. Since income verification is vital to the mortgage application process, it’s important to make sure you can provide all of your income details from the last 2 years to the lender.

Sometimes there are issues with contacting employers, such as when your former place of employment goes out of business. Or, you may be a freelance or contract worker with atypical forms of income verification. Regardless, make sure you are clear with your loan officer regarding your employment history.

Other common causes for denial of an application include problems with your down payment (such as not meeting the required down payment amount) and credit history issues, such as having a lower score than you thought.

Credit score lower than expected

It’s not uncommon for a lender to run a credit check and come up with a score that is lower than you anticipated. Since scores change on a monthly basis, and since there are differences between the scores provided by the three major credit bureaus, you might find that your lender found a score slightly lower than what thought.

If the score is drastically different, however, this could be a sign of two things. First, make sure that you haven’t recently made multiple credit inquiries (such as applying to several lenders who perform credit checks) or by opening new credit cards or loans. These inquiries temporarily lower your credit score.

If you haven’t recently made any inquiries (other than applying for a mortgage with your lender of choice), then it’s a good idea to get a detailed credit report and scrutinize it for errors. Inaccuracies on your credit report can be disputed and resolved and can give your score the boost you need to be competitive on your mortgage application.  

Choosing a different lender

While most lenders use similar criteria in determining your borrowing eligibility, there are some differences between lenders.

For example, some lenders might take on more risk by lending to someone with a lower credit score. However, they will also likely require a higher interest rate in exchange for the added risk they’ve acquired.


Now that you know your options for what to do when an application is denied, you’re well-equipped to start tackling the issue and getting back on track to becoming a homeowner.

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Knowing how to manage your money is an important skill. Managing your money is not the whole picture. To have a complete description and confidence in your financial future, you need both to manage and master your finances. Mastering your money takes planning ahead of your income and setting goals, so you are plotting a course before the money arrives. Managing is directing and controlling the resource you already have.

Managing Your Money Matters

Managing is defined as to oversee or have supervisory control. When you start a money management routine or system, you start with what you have, the balance in your accounts. Then you plan the direction those dollars will go. A budget is a standard management tool. It can be a simple paper list or an Excel spreadsheet of expenses in order of due dates. Anything that allows you to track where your money needs to go by priority level. Budgeting is an ongoing routine you will need to monitor and execute. There are many online budgeting apps to help you start managing your money. Make sure the app can do everything you need it to before you download. Some apps require you to connect your bank accounts and credit cards so if you are not interested in that find an offline program.

Mastery-Proactivity in Action

The other part of financial fitness is learning to be proactive and plan. This process involves setting goals for you and your future. Goals can include building up a savings account or starting a college education fund. You can plan for home improvement and beautification projects. Anticipating any increase or windfall in your income will help to make every dollar count. No longer will you wonder where your money went; you will have confidence that you are the expert in your financial future. No one out there will work harder to fight for your future than you, so think about how you want your life to run and plan accordingly. 

Putting It All Together

So financial fitness is not only the routine maintenance of managing the income and expenses. It is also taking the lead in your life, setting out those goals and projects that you want to accomplish and making plans to achieve them. Asking someone you trust and respect to look over what you have put together can be a great resource to make sure you have all the components to your plan. 

Take an hour this week and do a budget checkup on yourself. 

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