If Your Loan Is Denied
If your application is turned down, federal law
requires the lender to tell you, in writing, the specific
reasons for the denial. Make sure you understand the reasons
given�you may be able to find answers or alternatives that
will satisfy the institution�s lending standards. Even if
that doesn�t happen, understanding fully why the loan was
denied may improve your chances with the next lender you
visit. Factors that may affect the loan decision include:
Down Payment
Is your proposed down payment sufficient? If not,
perhaps the lender offers other types of mortgages with lower
down payment requirements.
Appraisal
Is the size of the mortgage you need too high, given the
property�s appraised value? If similar houses in the
neighborhood have sold at prices comparable to yours, maybe
the appraiser undervalued the property. Suggest that the
lender re-examine the appraisal. You also have the right to
receive a copy of the appraisal if you have paid for it.
Credit history
Is the lender doubtful�because of your level of debt or
credit history�about your ability to make the monthly
payment? Ask how your debt ratios compare to the lender�s
standards. If there were special circumstances surrounding old
credit problems, ask for a chance to explain.
