Sometimes things don’t go as planned but it can be heartbreaking when you have your sights set on a home but you’re told ‘no.’ What do you do?

First, this really shouldn’t happen. If your loan officer did the right homework and told you upfront after review of all  your required documentation, a preapproval should be pretty solid. If you submitted your application along with the requested documentation, not moving forward with a complete approval is somewhat rare.

What could have happened? Well, maybe rates have gone up during the time of your initial preapproval and time to write an offer. It’s certainly well documented that interest rates have reached levels not seen in quite some time. Maybe your initial preapproval was when mortgage rates were hovering in the mid-3.00% but now they’re in the low 7.00% range. That's quite a difference. In this case, speak to your loan officer about other options. 

If for example you’ve had your preapproval based upon a 15 year fixed, see what happens when you extend your proposed loan term to may 20, 25 or 30 years. Maybe you can look at paying a discount point or two to lower your rate enough to obtain an approval.

Another option may not be the best option but perhaps you can try a smaller home or a different part of town. If you’re just ‘barely declined’ then these small steps can push you across the goal line.

It might also have been the instance where something has happened to your credit during that same period.  If it’s a credit issue, look at your credit report and work with your loan officer to figure out what you need to do in order to get your scores back up where they need to be.

But right there is the key. If you do in fact not get a loan approval, work with your loan officer to find out why. Your loan officer can tell you what an automated underwriting system said. This AUS, will itemize the things listed that affected the decision. This in fact is your roadmap to ultimately get where you want to be.

But do recognize this- once your loan officer issues your initial preapproval, it’s pretty solid. Loan officers don’t stay loan officers very long by telling someone they can qualify then later on tell them the opposite. If you think of your initial roadblock instead as a roadmap, the process will go much easier.