If you have lots of debt or a bad credit score, then getting a mortgage can be quite difficult. It’s common for people in these situations to get denied when applying for a home loan. Is this the end of your house-buying dreams? No! It doesn’t have to be. Take a look at these 3 things you can do next.
Address The Problems
The first thing you need to do is find out why you were denied. Typically, it will be because of one of the reasons I mentioned earlier. Lots of debt and a poor credit score are probably your best bets. So, what you need to do is rectify these issues.
Get yourself cleared of debt, and improve your credit score. Thankfully, you’ll find that clearing debt will also improve your credit score. So, you kill two birds with one stone.
Once you’ve addressed these issues, you can apply for a mortgage again. The same lender may accept another application; it depends on how much time has passed. If they don’t, then look for a different lender. Now, with an improved situation, you may find it easier to gain approval. Then, you’ll have a mortgage and can go out and buy your new house.
Often, when denied a conventional mortgage, you think your options are limited. There’s no way you can get a mortgage and buy the house of your dreams, right? Wrong, there are other lending options at your disposal.
One of the most common is called seller carried financing. It’s a unique way of allowing buyers the opportunity to afford a house. The concept is fairly simple; the seller acts as the lender. They give you a mortgage, and you will pay it back over time. The house is used as collateral against you until you’ve paid it back.
In a way, it’s almost like you’re renting a home. Instead of paying rent to the landlord, you’re making mortgage repayments to the seller. Many people see this is a great finance option when they’re denied a traditional mortgage from banks. Who knows, it might be the best solution for you.
Savings & Family Support
The final idea is very much a last ditch thing to turn to. If you re-apply and get denied again, then try seller financing. If that doesn’t work, then you’re left with this final option. Instead of looking for mortgages, turn to your savings.
Scramble as much of your money together as you can. Figure out how much you have in investments and savings accounts. Add it all up and see where that leaves you. It may surprise you how much money you’ve managed to save up over the years. If you’re looking for a cheap property, you might be able to buy it yourself. If not, then you should turn to your family.
Ask your family for financial support at this tricky stage in your life. A lot of people are too ashamed to do this, but it’s your final option. Your parents may give you a loan that helps cover the costs of the house for you. Like I said, it’s a last ditch solution, but it might be worth a shot.
If you’ve been denied a mortgage, then consider these three things next. Before you know it, you’ll be living in a brand new house!