What to Do When the Lender Says “No”
Declined. It happens. It’s kind of a negative topic, but it is something that home buyers may deal with sometimes, especially in these days of tighter lending standards. The good news is that it isn’t a final sentence. It’s just a temporary situation that can be fixed.
There are many reasons why the lender says no to a buyer. Most of the time the reasons have to do with insufficient credit. Sometimes the Debt-to-Income Ratio is too high. Both of these situations can be fixed. Blair Warner, credit counselor with Upgrade My Credit, and I discuss “What to do when the lender says no,” in the following video:
Several Key Points:
1. Don’t get discouraged. You can spend a few months getting mortgage ready and be able to get back to searching for a home.
2. Most of the time the debt-to-income problem is due to credit card payments. The good news is that those are the easiest to take care of. They do need to be taken care of in a strategic way, guidance from a credit counselor or a lender is a good idea.
3. Mortgage underwriters look at the last 12 months of your credit history. Many times it really doesn’t take a long time to fix a low credit score.
4. It’s a good idea to check your credit report and know what your credit and debt situation is before you call a Realtor. Know what’s on your credit report.
5. If you don’t have enough credit, it can take longer to build it. FICO, the credit score company that most lenders use, needs to see a payment history.
6. When you get declined by a lender, it doesn’t mean you shouldn’t buy a house, it just means that you don’t fit in the box yet. Working with your lender or a credit counselor can help you get to the place where you meet the criteria and you will fit in the creditworthy box.
It’s not what you wanted to hear… but it happens. Sometimes it means fixing your credit, sometimes it means you need to lower your debt. Either way, it’s not a final judgement, just a hurdle. Don’t give up!
If you need professional credit services, contact Blair Warner – Upgrade My Credit, 817-886-0302, ext. 3