Facing Up to the Consequences of Home Loan Rejection by Rob K. Blake

Perhaps one of the most dreaded scenarios that a homeowner has to face is having his or her home loan disapproved by the bank. This is especially true if you’re convinced that you already found the home of your choice.



This is a reality that you have to face as a homebuyer. Not every step during the process would go as smoothly as you would like it to, so it definitely pays to have a backup plan and be prepared for any eventuality.



Possible Reasons why Your Loan was Rejected



Before delving deeper into the things that you need to do should a lender reject your house of choice, let us check on the possible reasons why it happened in the first place:

- These days, more and more lenders are taking a conservative approach when it comes to approving the loan applied for by a borrower. Because of the volatile status of the housing industry, they need to take extra care in making sure that a borrower will be financially capable of paying for a loan. So if it looks like a particular property is too much of a financial responsibility, the loan will be rejected.

- The bank may have decided that you are a bigger credit risk than they initially thought after assessing your financial records.

- The bank may have doubts about the appraisal value of the home that you are looking forward to buying. This is especially true if the value of the home is greater than the existing price of similar homes in the area.



What to Do if a Lender Rejects Your Home Choice



So what are you supposed to do if a lender rejects your choice for a home? Seeing as how the bank is a financial authority when it comes to assessing the values or profitability of a home, do you really want to push on with the act of buying a home that your bank or lender has already rejected? There could be something wrong with the property – or the conditions surrounding the sale of the property – that is why the bank chose to reject your home choice.



If the appraisal seems to be perfectly fine, there is another reason why the lender rejected your home choice. For this, what you can do is consider ordering another appraisal. There are two routes that the new appraisal would take. If the value of the home appears to actually have a lower value, the seller might have settled for a lesser profit just so that the home can be sold. On the other hand, if the re-appraised value is higher, you can probably negotiate for a lower price. Just remember that a second appraisal is an additional expense that you have to shoulder.



If all else fails and you really think that there is no other house in the area which is more suitable for you and your family than the one that you’ve already chosen, then choose another lender. Check with smaller local banks or credit unions if they can have your loan approved.



Despite the fact that your previous lender rejected your choice of a home, there is still a chance for you to own your dream home by finding another lender. You might have to shoulder some additional expenses, but being able to get financing for your dream home will be well worth the effort.


Rob K. Blake, refinance expert and author, educates mortgage shoppers on finding local providers by state like Illinois Mortgage Brokers and Lenders and provides reviews of national companies like Amerisave Mortgage.



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