Consumer Reports: What to do if you’re turned down for a mortgage
PHOENIX (3TV/CBS 5) — Home ownership can be a valuable long-term investment and wealth-building opportunity for you and future generations. But getting your foot in the door — actually buying that first home can be tricky, especially for certain communities. “Black and Hispanic customers actually get denied home loans almost twice as much as white customers,” Lisa Gill of Consumer Reports said.
If your loan application gets denied, there are things you can do to help save it. But she says you have to act fast. “If you want to save your loan, you’ll have as little as a day or two between the time your loan officer breaks the bad news to you and the bank sends a formal letter of denial,” Gill said. Start by asking for a detailed explanation for why you were denied, which you are entitled to get by law.
If you were denied because some information was missing or unverifiable, then get it ASAP. “By providing a letter explaining anything the lender may not be clear about, such as reasons for gaps in employment along with supporting documentation, could salvage your loan application,” she said.
If you find you’re hitting dead ends, shopping around for a new mortgage might be your best bet, but do it right away. Every time your credit score gets “hard checked,” it’ll cost your score several points. Gill said, “You’ll have 14 days from the first day the original lender did a ‘hard check’ to shop around for a new mortgage without further hurting your credit score.”
If you are looking for a new loan, a lender that participates in a “Special Purpose Credit Program,” might help. This program allows the lender to specifically assist disadvantaged borrowers of color, women, people with disabilities and other underserved groups. You can find a bank offering an SPCP near you by visiting the NFHA’s website.
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