Imagine this scenario: You find the house you adore. You do the legwork on mortgage loans and get pre-qualified for the right amount. The price is more than reasonable and the buyer is happy to accept the offer you put in. You are on Cloud Nine and diligently work to submit your required paperwork to the lender. A few days or weeks go by and you finally here from the lender – they have rejected the home you want. It is a nightmare that does happen to home-buyers. The question is how is it you can get so close to closing and lose the entire deal based on the lenders decision.

Home Rejection Rationale

Provided your loan application was completed and included all requirement documentation per the lender, the denial could be for several reasons that are not actually house related. Here are some of the other reasons for a rejection:

Credit Risk

While you may have been pre-qualified for the mortgage loan, at the final decision time the lender may have reconsidered your credit worthiness.

Home Appraisal

After you have submitted your application paperwork, the lender may have found reason to be concerned about the home appraisal and the home condition. This is becoming more common among lenders today.

Home Value

Appraising a home can be difficult especially if the home you are considering is unusual and it is next to impossible to find comparable homes. Lenders can often doubt the appraised price of the home and if it is indeed relevant to the true value of the house.

What Can You Do?

Before letting anger take control of your emotions, consider first what the lender is telling you. If there is something that is spooking a reputable lender, be certain you want to take a risk with buying the property. Because potential buyers often get lost in the moment, it can difficult for them to see the big picture including what troubles with the home lay ahead. A red flag to a lender should be a warning for the potential buyer.

If you are certain you want to move forward on the purchase of a home, you’ll need to order and pay for another appraisal. If the second appraisal is consistent with the first, you may have to convince the lender to reconsider their decision. If the second appraisal comes in lower than the first, you may have to ask the seller to decrease the price of the home, even if you have already made an offer, in order to get the lender to agree to the loan.

As a final step, if you have already found the perfect home you may have to consider finding another lender. Visit a local credit union or a smaller community bank that may be more apt to lend to you with more flexible terms. This may also be the right move because community banks and credit unions are much more familiar with the area you want to purchase in, whereas larger banks have no idea about the nuances of a particular home or neighborhood. Consider contacting a mortgage broker as a last resort who may be able to match you with a lender based on your unique situation.