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Rejected for a mortgage? 5 Reasons Why and What To Do.



Have you recently been rejected for a mortgage and wondering what you should do next? Guess what? So are at least ten percent of people who apply for a mortgage in the U.S. That’s right, one in ten individuals who apply for a mortgage are rejected. And if you're a Black or Latino individual, those numbers are even higher. At My Home Pathway, we don’t just help you on your path to home ownership - we also help you understand how to improve your situation.

Let’s dig into the reasons why you might have been rejected in the first place, because financial literacy is the foundation to improving your financial outlook.



1. Your debt to income ratio is too high. Otherwise known as DTI, this is the percentage of a consumer’s monthly gross income that goes towards paying debts. If this is the case you should try and explore if there are ways you can either reduce your overall debt or find ways to boost your income. Depending on how important this mortgage is to you, you may or may not want to consider selling off some assets to reduce your overall debt and improve the situation.



2. Loan-to-Value is too high. Loan-to-Value is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. Should this be the case you can look towards asking for a lower loan amount. In addition to that you may also want to consider increasing your initial down payment. You may want to again consider selling assets to allow for that larger down payment.




3. Credit score is too low. You’re probably well aware of this already because it’s probably something that was of high importance throughout the initial mortgage process but in case a refresher could be helpful, your credit score is a number assigned to consumers that indicates to lenders your ability to repay a loan. While boosting your credit score doesn’t happen overnight, there are steps you can take to improve it over time. Services like Experian Boost can help. And as part of My Home Pathway’s Home Readiness Report, we provide custom recommendations on those steps you can take to improve your score.

4. Insufficient/unverifiable income or missing/incorrect documents. Documentation is extremely important when applying for loans or mortgages so make sure to dot your i’s and cross your t’s because even if you have the money, if you can’t prove it the end result will be the same in the eyes of your lender. It’s during this period of time that you should put greater emphasis on being organized and keeping track of all your financial documents like your W-2’s.

5. Bankruptcy. Unfortunately for this one, if you’ve declared bankruptcy within the last two years, you won’t be able to get a conforming loan.



When you download the My Home Pathway app, our first step is creating your Home Readiness Report. That report gives you an honest look at your financial situation and provides customized recommendations to address the areas you may need to improve in order to get pre-approved for a loan with one of our trusted bank partners. From steps to improve your credit score to ways to improve your debt to income ratio, My Home Pathway’s goal is to provide recommendations and specific actions you can take to make home ownership a reality.

Download the My Home Pathway app for more information on how you can work towards obtaining the home of your dreams.