Know What 'No' Means
by Marc Hopkins

You applied for a loan and were told that you do not qualify. What should you do? The biggest mistake that most people make is accepting that answer and giving up. A no answer may be the end of that road, but it does not mean it can’t be the beginning of a new one. Now is an important time to pause in the face of disappointment and ask “Why?”
A good loan officer or broker will be able to tell you why you did not qualify. A great one will tell you why and help you fix the problem. There are several reasons why you might get a no, only a very few are fatal.
One reason might be not what you are asking for, but who you are asking. A friend of mine knew he was going to hit a rough financial spot. He had some large unavoidable expenses coming up and needed cash. He wisely decided to pull cash out of his home before the problem hit to give him the money he would need to get through it.
He first went to his Credit Union and was told no. He did not ask why, he just accepted the answer and walked away. The truth was that he did in fact qualify based on his income, equity, and credit. The reason he was denied was because this Credit Union did not loan above 80% of the homes value and he needed 85%.
Wisely he did not give up immediately and went to his local bank where he was told no again. He was informed by the bank it was because of some late payments in his credit history. They were several years old and one was an error, but they could not help him.
At this point he gave up assuming he was unable to get a loan. The expenses came and wiped out his cash. He was unable to pay his bills and his credit scores dropped after several late credit and mortgage payments as he struggled to make ends meet. It took him years to recover, though the good news is that he did.
What he did not know at the time was that different Credit Unions, banks, and lenders have different criteria they are willing to lend on. The Credit Union accepted his credit but not the amount he needed. The bank accepted the amount but not the credit. There are hundreds of lenders and each one has different guidelines. You cannot ask only two and assume it cannot be done. He could have asked other Credit Unions, banks, or lenders. He could have talked to a mortgage broker who works with many different lenders to find the right one for each situation. If he had not accepted “no” as an answer, he would likely have gotten his yes.
If you should ever be turned down, understanding why you got that answer will help you determine if you should keep asking. If it is because of their guidelines, then you may be able to find someone who has a more flexible program.
What if you have asked everyone and the answer is still no? Now especially is when you want to know why, and more importantly what you can do about it. A no in mortgage lending is a no today, not a no forever. If it was because of credit, find out what things on your credit history are holding you back and what you can do to fix the problem. Maybe the no was because there was not enough income to qualify. This may mean that you need to find a smaller home, look into a BMR (Below Market Rate) home, or find additional income. The key is that you know what you need to do in order to fix the problem.
If you do not get a yes find out not only why, but what you can do to fix it. If home ownership is your dream, if you need to refinance, or if you want to pull equity out of your home, do not stop until you get yes or at the least a clear idea of what you need to do in order to get one.

~ Marc Hopkins is a licensed Mortgage Consultant and Notary Public at Brentwood Pacific Financial. He can be reached at 408-307-8242 or e-mail him at mhoppi@msn.com