Mortgage denied? You’ve come to the right place. From alternative mortgage options to tips on saving and improving your credit, we’ve rounded up everything you need to know about getting a home after being denied a mortgage. Let’s jump in and get you one step closer to homeownership.
1. Rent to Own
If your mortgage application has been denied, a rent-to-own option might be best for you. This blog explains more about how a rent to home works. When you are renting a home to own, you’re leasing a home and a portion of your rent is going towards your down payment.
At the end of your rental period, you’ll have a down payment to apply to your purchase price. This helps you save for a down payment automatically while living in the house you’re going to purchase. This allows you time to save without having to move and start your house hunt all over.
Renting to own also gives you time to repair your credit and pay down debt. This is a great opportunity for homebuyers who have been denied a traditional mortgage.
2. Extreme Save Challenge
If you’ve been denied a mortgage, the good news is that this isn’t a permanent decision. With a little time and dedication, you may be able to save enough for a larger down payment. You can also save more money to reduce and pay off your debt.
Oftentimes, with a low credit score or a lower income, you’re able to qualify for a home with a larger down payment. Saving for one can be hard but with some diligence, it’s well worth the effort. To start an extreme, saving challenge, give yourself a goal and a deadline.
Let’s say you want to save $10,000 in one year. That’s roughly $833 per month. To do this, you may consider getting a roommate, moving in with a friend, or even getting rid of a car, if you can. Set a budget and see where you can make some cuts.
3. Improve Your Credit Score
Another way to improve your chances of getting approved for a mortgage is by boosting your credit score. The lower your score the more difficult it is to get approved for a mortgage. If you do get approved, you will also have a higher interest rate which will cost you more money in the long run.
To improve your credit score, start by paying off or reducing your debt. The more available credit you have that you aren’t using, the better your score will be. Using all your available credit weighs heavily on your score. Reduce your debt and you’ll see your score start to creep up.
Mortgage Denied: Know Your Options
If you’re mortgage denied, consider a mortgage alternative such as a rent-to-own program. This could help you save for your down payment and into a new home. Saving and reducing your debt can also help you boost your credit score and pay off your loans and credit card bills.
It’s important to know that a mortgage denial isn’t forever. With a little hard work and alternative options, homeownership is possible with the right tools. For more finance and real estate tips, check out the blog section.