Owning your own home is not only a dream but also a financial goal for many in and around Barrie, Ontario. However, factors like high housing prices, rising interest rates, an increase in self-employment and contract work, and new mortgage rules that came into effect this year have made this dream a little more difficult to achieve for quite a few families.
If you’ve recently had your application for a mortgage denied, you may be wondering what your next steps should be, and whether you will ever be able to purchase your own home. Before putting that dream on hold, here are a few things to consider:
Why was your application denied?
The first thing to consider after your mortgage application has been disapproved is why it was rejected in the first place. There are a few different reasons why this may have happened that is not always fully explained to applicants. Your credit history and credit report are one reason. A low credit score can act as a warning to your lender that you may not be a good candidate for a mortgage loan. If this is the case, it may be a good idea to double check your credit report to see whether it’s accurate, and then get to work on improving that credit score.
Proof of income can be another reason why you don’t get the green light on your mortgage application. For those who are business owners or self-employed, it can, unfortunately, be a little more difficult to get approved by major lenders, as they often associated an unpredictable income with higher risk.
Finally, the amount of debt you carry can also affect your ability to get approved. Lenders will look at something called your debt service ratio when considering your mortgage application. Your Total Debt Service Ratio (TDS) is calculated by adding your family’s monthly mortgage payments, property taxes, and other debt payments, then dividing it by your family’s gross monthly income. If you’re not sure what your debt to service ratio is, you can use this calculator to find out.
Is it really the right time to buy?
Once you’ve considered the reason why your mortgage application was denied, it’s a good idea to think about whether it is an appropriate time for you and your family to purchase a home. If you carry a lot of debt or find it hard to pay your bills on time, you may want to pause for a moment and focus on paying down that debt and setting up a household budget that works for you.
If, however, you’ve determined that it is financially a good time to buy, it’s time to consider the possible mortgage options you have.
What other options are available?
It’s often a misconception that big banks are the be all and end all when it comes to mortgage loans. However, there are other lender options available that you may not have considered. In addition to banks, mortgages are also available from mortgage companies, insurance companies, trust companies, loan companies and credit unions.
How could a mortgage broker help?
If your initial mortgage application was denied, an experienced mortgage broker can work with you to determine whether it is, in fact, the right time for you to buy and can help you investigate some of the alternative options available. Mortgage brokers negotiate with lenders on your behalf and have built relationships with lending companies. This means that it’s often the case that a mortgage broker can get you approved for a mortgage even if your initial application was rejected.
If your initial application for a mortgage loan was denied, it’s not yet time to give up on your dream of owning a home. As an experienced mortgage broker in Barrie, I can work with you to investigate your other lender options and may be able to help you get approved and make your home ownership dreams come true. To learn more, connect with me today at 705-315-0516.