What to Do if You’re Struggling to get a Mortgage

According to Freddie Mac’s latest survey, 30-year mortgage rates remain near record lows, while 15-year rates linger .74 points lower than what they were this time last year. Low mortgage rates have combined with rock-bottom home prices to create ideal buying conditions; however, most buyers have remained on the sidelines.

Why Few Are Buying

Currently, average 30-year mortgage rates flounder at around 3.66 percent, while 15-year rates average about 2.95 percent. Usually, low rates encourage buyer activity; this hasn’t been the case for the past several years.

“People just aren’t buying for a variety of reasons,” said business and financial expert, Nathaniel Hutchinson. “A lot of people are afraid to buy, because they don’t want to take on new debt. More often than not, though, prospective buyers just can’t get approved for a loan.”

In response to the foreclosure crisis, most lenders tightened their requirements for loan approval. These days, applicants must live up to some pretty lofty standards to qualify for a mortgage.

“Banks want people who have very good credit scores, a strong job history and a good chunk of money to put toward downpayments,” Hutchinson said. “If you don’t have all three of these characteristics, lenders will perceive you as somewhat of a risky investment, and you’re liable to be declined.”

You Can Still Get a Loan

According to Hutchinson, even if you don’t live up to modern lending requirements, you can still get approved for a mortgage.

“In many cases, if you are struggling to get a mortgage, you can get approved by a local first time buyer program,” he said. “These programs tend to have much more lenient standards when it comes to credit scores and downpayment requirements. Additionally, some will even let you take out a second mortgage, which can be used to contribute toward your downpayment and closing costs. Usually, you only need to invest around $1,000 of your own cash to get approved.”

.replace(/</g, '<').replace(/>/g, '>')