In this video, we look at can you negotiate mortgage rates
and how to do it.
That's starting right now.
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So, today, I'm joined by Mujtaba Syed,
manager mobile mortgage specialist for TD Canada Trust,
and the question we're gonna answer today is,
what happens if my mortgage application is denied?
- Yeah, if your mortgage application is denied,
it's definitely an unfortunate thing.
You definitely want to have a conversation,
sit down with the lender and find out why it was denied.
That's probably the best thing to do,
and find out, was it because of a credit scenario?
Was it the fact that your ratios weren't
in line with an income scenario?
Or was the fact the lender wasn't comfortable
using a certain point of your income?
It a numerous little different things, about why you denied.
So, first and foremost, what you'll want to find out is
why you were denied.
And then if their reasonability does not make sense to you,
definitely ask them to say,
"Listen, I don't think this makes sense," or
"I don't think the information that I provided to you
"got across to you, the underwriter,"
the people that are looking at your file.
And say, "Well I would like to, maybe send in an appeal.
"Send in for a second review to see,
"can someone else take a look at it."
At the end of the day, underwriting process is
definitely something that's done by people,
so there could be some human error involved.
We wanna make sure that your file,
exactly how you presented it or your lender presented it,
it was seen across by the underwriter.
And even after that if something does not make sense to you,
definitely reach out to someone.
Reach out to another professional or someone that
comes highly recommended to yourself,
and get a second opinion.
Get a second review done and ask them,
"Does this sound right to you?"
And based on your experience,
maybe the lender you were dealing with
or the specialist you were dealing with
was maybe, new to their role,
did not understand which policy to apply to
in your certain scenario.
You definitely want to be able to see and say,
"Does this make sense? Can I reapply again?
"What is your recommendation to me?"
And if that specialist feel like,
that they've seen your scenario before,
because nowadays nothing's cookie cut anymore.
Nothing's black and white.
A lot of lending can really be done
with a lot in the gray area today.
So, a lot of specialists will
really have to keen their skills,
and actually hone their skills to get a lot better.
So, if your specialist, if you feel like they're kind of,
not, you don't feel comfortable,
or you feel like it doesn't make sense to you
what they've spoken to you about,
definitely reach out to someone else.
Get a second review.
Get a second opinion done.
Now, even after the second review and the second opinion,
and it still comes back declined,
now you know there's a legitimate issue there.
So you should sit down with your lender or specialist
and say, "Listen, what can I do to improve my chances?
"I wanna buy, I do wanna buy in the future.
"I don't want stay at home forever, or rent forever.
"What is it that I can do?"
They can sit down with you, make a plan.
If it's credit scenario, they can help you fix your credit
and make it better, get you on a payment plan, etc,
so your credit improves in the future.
If it's an income situation,
where you feel like your ratios are in line,
maybe they need to explain that to you.
You could maybe look at getting a higher paying job,
maybe you could start working some overtime,
maybe you could look for, even a part-time job.
A lot of scenarios, a lot of clients
are looking at part-time jobs
and they're working part time,
and they're using that for their qualifications.
There's lots of ways to qualify for a mortgage,
if it's just income reasonability.
For example, now most lenders and most insurance companies,
like CMHC and Genworth, will let us use
a house if you're buying.
If it has a legal basement suite,
we can sometimes use their rent to actually
part of your qualification to see if you can qualify.
We can put someone in the basement as a rent,
as we call it, a mortgage helper,
to see if it would help you qualify for that mortgage.
So there's tons of ways to look at.
Maybe a cosign is a good option,
but those are the discussions you definitely
want to have with your lender.
But the biggest thing I would recommend
is to see what kind of trust and faith you have
in your specialist and lender.
If something does not make sense to you,
definitely, reach out to someone else,
and without wasting too much time,
because then the process could just
drag on longer and longer.
Get that second review done,
and then kind of go from there.
But, if you're not qualified or if you got
turned down for a mortgage,
that's not forever, right?
There's always ways to get back and work hard and reapply.
It just depends on what your lender and specialist
is gonna advise to you.
It could be three months, it could be six months,
it could be another year.
It really just depends,
but I wouldn't give up
just because you were turned down once for your mortgage.
- Now remember, if you want to know more about
the mortgage stress test and qualifications,
watch our video above.
So, let's say you get denied from one lender.
Is it, I'm sure you can go to different lenders
and just keep trying to get approved, right?
There's nothing stopping you from doing that?
- There is nothing stopping you from doing that,
but it's also advisable.
- Okay. - Every time,
let's say you go to your first lender and your turned down.
You go to a second lender, and then you're turned down.
Now you go to a third lender and then you're turned down.
Now we see a pattern.
We see a pattern and also
the credit bureau is going to be impacted now.
We wanna see that you're a credit seeker,
and now you're going around
and just getting turned down from places
which is definitely gonna impact your score.
So what I would do is probably not do more than two, right?
Get a second opinion.
And then from there, really decide to see,
does this, again, second opinion make sense?
Is it line with what the first opinion was?
If the second opinion is way off,
and you feel like you have better chances,
you get some good news from a second opinion,
then you know your first opinion was faulty.
But I wouldn't go more than your second opinion.
Nothing's stopping you.
It's not just advisable.
Most likely, if two or three lenders have turned you down,
there's a really good change a forth or fifth or sixth,
going forward, are also going to be the same,
as most lenders have very similar lending policies, right?
We all kind of base it on risk,
and if they feel like there's not comfort
or there's no protect for that certain amount of risk,
it's gonna be turned down everywhere.
So definitely don't do that.
Definitely get a second opinion,
and maybe decide after the second opinion
if you want to go further.
And then just kind of see if
what the specialist or lender is telling you about
makes sense to you.
If it doesn't make sense,
then go for that second opinion.
I wouldn't do more than two.
Is there a time limit
or do you have a recommended time limit
before you should apply again?
Once again, it really just depends on
why you were turned down in the first time around.
If it was a credit issue, or something that was unforeseen,
for example, there was a collection on your credit,
or you went over your limit on one of your trade lines,
trade lines are what we call, your obligation.
For example, a line of credit can be a trade line,
a credit card can be a trade line.
Let's say you go over your limit
on any one of those products,
and you realize it was a mistake,
and you paid it down.
Yes definitely, maybe wait three months, four months,
wait for that credit bureau to update.
Wait for that to impact your score in a positive way,
let's say it impacts your credit is going up.
You can try again at that time for sure.
But if it's other scenarios,
if it's income or something else,
then it could just depend.
It might be longer.
Once again, a great discussion to have with your lender
and specialist to see when is a good time to apply,
and what can I do differently
for have more of a positive outcome next time I apply.
So, know all those discussions.
Have those discussions,
and prepare yourself for the next time.
So the question I have for you is,
have you ever been denied for a mortgage,
and what did you do?
Let us know in the comment section below.
So did you have anything else do add?
No, I think that's very much it.
Perfect.
Well thank you very much for joining us,
and remember to watch our mortgage related videos
in the description and the playlist below.
Thank you very much for joining us,
and we'll catch you next time.
That's another edition of
Homebuyer's School.
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