We frequently receive mortgage applications from individuals who have either been rejected or anticipate rejection. You might be turned down by another bank or mortgage company, but your application can actually be approved with the right lender. If you recently were rejected or are worried you might get rejected, we are going to cover the types of applications that are most frequently turned down, why, and what you can do about it.
Approvable Situations That Can Cause Issues
While one of these situations may apply to you, it does not mean that you can’t get approved for a mortgage. In many cases, your application is approvable and just requires working with a lender with the right experience and knowledge to help.
Self-Employed Borrowers
Borrowers with Retirement Income
Borrowers with Credit Issues or Challenging Credit Scores
Applicants Who Work in the Cannabis Industry
Working with a Bad Loan Officer / Lender
Self-employed borrowers can have unique income challenges. It can be difficult to calculate self-employed income as it is complicated and inconsistent. Many mortgage lenders don’t truly understand the technical aspects of self-employed income. Some lenders will just simply not work with this type of borrower or mistakenly reject many mortgage applications because they don’t know how to calculate their income. Rest assured, you can qualify to buy a home when you are self-employed. It’s important to work with a lender like Homestead Financial Mortgage, who can walk you through the process.
Applicants with retirement income can confuse many underwriters. Applying for a mortgage when you’re retired is no different than applying for one if you are employed. You still need to meet the credit, down payment, and documentable income. Income for a mortgage application is not necessarily the same as taxable income. Types of income that can be considered are social security, supplemental social security income, pensions, 401ks, IRAs, interest income, VA benefits, and long-term disability. You may also be able to include annuity, survivor, or spousal benefits as long as you can show that you will retain those for a specific period of time. There are many ways to use assets in place of income for a mortgage application to be approved.
Borrowers with credit issues can be problematic if not discussed or discovered during pre-approval. If there is insufficient time to resolve the credit issues during the application process, it can create a disaster.
For example, someone had a foreclosure on their FHA mortgage in the past. However, there was a mistake in the date of the resolution. This would cause the borrower to wait an improper amount of time. A good loan officer would recognize this issue and know how to resolve the dating issue with HUD prior to application.
Applicants with a challenging credit score need to do more work before applying for a loan. Borrowers usually fix this issue by paying off some of their debt. This usually will allow the score to rise enough to qualify. While the interest rate may be higher than the market, it’s not usually by much. We can work with borrowers to help them dig into their credit and work with them to repair any issues that we find.
Borrowers who work in the cannabis industry are the newest entry to facing issues when applying for a mortgage. While cannabis is legal at the state level, it remains illegal at the federal level, which disqualifies borrowers from certain types of loans such as FHA, VA, or USDA loans. But you CAN still qualify to buy a home if you work in the marijuana industry with a conventional loan. We have successfully helped many clients do just that.
Working with a bad loan officer or lender is a sure way to get denied if you’re facing challenging situations. While bad loan officer-ing isn’t a real word, it’s a pretty accurate description. There are many lenders who don’t want to do the homework necessary to approve a fringe transaction or to handle a difficult situation.
At Homestead Financial Mortgage, we have been in the business for 25 years, and our loan officers will take the time to explore your situation. You can feel confident that you’re working with a team that has taken the time to evolve with the ever-changing landscape of lending and who will take the time to help you figure out whatever situation you find yourself in.
What to do if you’re a borrower who has just been turned down?
Hello! We’re right here, and it costs nothing to apply at Homestead Financial Mortgage. We will work with you in the way that you prefer, whether by text, email, or phone. With hundreds of customer reviews, you can also feel certain that you are working with a trusted lending partner. We can move quickly, often closing loans in less than 15 business days.
What to do if you’re a borrower expecting to apply for a mortgage soon?
Get pre-approved. You should call one of our loan officers and start the process of getting pre-approved. A pre-approval is a thorough vetting designed to deal with any potential challenges to getting a mortgage approved and allows borrowers the time to deal with any unexpected hurdles.
For example, a self-employed borrower may have income calculated prior to finding a home. Homestead will do a complete review of the current year’s taxes prior to filing. This ensures the income is sufficient to qualify for the desired mortgage amount.
Borrowers who are retired or about to retire would get pre-approved to ensure there is enough income for mortgage purposes to qualify for the desired amount.
So, in other words, get pre-approved right away when thinking about buying a home. A pre-approval is good for 90 days, assuming no changes in the financial profile. It’s important to find out what hurdles you are facing and have a plan of action. In a competitive market, it’s imperative to go into a contract with all your ducks in a row so you have the highest chance of securing a home.
If you need financing, reach out now. We will guide you through the application to ensure it’s a smooth and successful process and get you approved to buy a home.