In an effort to save money, many consumers have turned to a mortgage refinance as an option. Working with a mortgage company or bank, a borrower can significantly reduce his payments by taking advantage of low interest rates. However, with today’s stricter lending laws, many mortgage holders are finding refinancing isn’t quite as easy as speaking to a loan officer. In fact, one in every two mortgage refinance applications are currently being denied, according to the Mortgage Bankers Association.
Despite those statistics, it can still be extremely discouraging to be personally denied the opportunity to refinance. When that happens, homeowners may think the opportunity has passed. Consumers do have other avenues to explore, including simply waiting until more equity has accrued in their homes. These other options may provide more immediate alternatives when a homeowner is denied.
Big banks face tight restrictions from corporate office, with loan officers likely to be questioned over the number of loans being approved. In this type of environment, officers usually have less flexibility, which means they can’t employ personal judgment when approving a loan. If a borrower doesn’t meet set-in-stone criteria, the application will be denied.
Many small local banks and community credit unions don’t operate with the same strict list of rules and regulations. Even in those locations that do, an on-site manager can individually approve a loan that might otherwise be disapproved. Since local banks have a commitment to personalizing the experience to each customer, a homeowner may find that these locations provide a more workable solution to refinancing in the current lending environment.
Clean Your Credit
If the lender denied your application due to your credit score, you can take measures to clean it up. Unfortunately, this process requires patience, since it takes time to see results. However, you can start immediately and begin to see progress within a few weeks. First you’ll need a copy of your credit report, which will be supplied to you for free since your application for credit was denied.
Once you have a copy of your credit report, you should examine it carefully for any errors. Often consumers find creditors haven’t reported that a past-due invoice was paid in full or information was reported under the wrong name. If you find errors, prepare and send a letter to the credit bureaus listing them and asking that they be removed. Include any documentation you have on the issue, including canceled checks or letters from the creditor. The credit reporting agency will conduct an investigation to determine the validity of the information and remove it from your credit report if so.
If you’ve been denied for a refinance request, these options provide an alternative. If possible, learn as much as possible about the reasons behind the denial and take measures to correct those. Additionally, don’t take a “no” from one lender as an indication that refinancing is out of the question. With so many lenders and refinancing programs, homeowners can easily find the perfect program to fit their individual circumstances.
Are you looking to refinance your current mortgage? Rates are close to the lows of the year, and you may be able to lock in a low rate for many years to come. Call us today to get a free rate quote or to speak with one of our licensed mortgage professionals.