What clients can do if rejected for a loan

With the tightening of credit standards, more homebuyers find themselves rejected when they apply for a loan. But after just one rejection, lending experts say buyers shouldn’t give up – they may still be able to qualify for a mortgage if they keep trying.
However, buyers shouldn’t try again until they closely evaluate why the lender turned down the original mortgage application and find ways to address the issues in their second or third attempt. Applicants can, by law, find out why they were rejected in a mortgage application. The Equal Credit Opportunities Act gives lenders 30 days to tell applicants, in writing, the specific reasons why they denied a loan.
Some rejected borrowers may need to save for a larger downpayment or take steps to improve their credit score.
Some applicants may find that shopping around for other lenders helps (particularly if the applicant has been a longtime member at a credit union) or discussing other alternatives with the original lender. Applicants could also consider different options, such as a loan from the Federal Housing Administration (FHA), which has less stringent requirements. Surveys suggest that most borrowers aren’t aware of FHA loans.


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