NASHVILLE, Tenn. (WTVF) — You probably know how hard it is to buy a home these days.
The market has softened a bit. But it still can be tough to find your dream home and then not be able to buy it because you're denied a mortgage. If that happens to you, what should you do next?
First of all, don't give up. Being told no can be heartbreaking and demoralizing, but “no” doesn’t always mean all is lost. There are often ways to turn that no into a yes and get into your new home.
Homeownership 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,” said Consumer Reports Investigative Reporter Lisa Gill.
If your loan application gets denied, there are things you can do to help save it. But 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 added.
Start by asking for a detailed explanation on why you were denied - which by law you are entitled to get. If you were denied because some information was missing or unverifiable - 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.
“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,” Gill said.
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 under served groups.
You can find a bank offering an SPCP near you by visiting the NFHA’s website.
