Stay Calm and Take These Steps if You've Received a Mortgage Denial

Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI



Stay Calm and Take These Steps

if You've Received a Mortgage Denial



Emotions play a big part in the home buying and financing processes.  In fact, an emotion (or two) may have provided most people the initial motivation to begin the process to buy in the first place ...




Emotions, such as curiosity, optimism, joy, excitement, pride, and even surprise drive people's desire to buy a home.  


Add to those the emotions someone may feel during mortgage pre-approval and application ... such as nervousness, fear, stress, and anticipation ... and it's easy to see why the processes of home buying and financing are likened to an emotional rollercoaster.



Most of my posts focus on those actions borrowers can take to avoid or slow that emotional rollercoaster down.  My aim is always to guide them through those steps that will proactively position them and then assist them through their home's financing to a successful mortgage closing.


But what happens in those instances when we hit a roadblock?  When a denial for a mortgage is received?


First, it's important to know that, although dramatic and making for a compelling story, that outcome can typically be avoided through careful preparation, with time, and via the guidance of an experienced and knowledgeable mortgage originator.


But in those instances where an actual mortgage application has been made and then denied ... what then?


Stay calm.  Don't panic ...


I've found that a denial returned at this point is typically not much of a surprise for those of my borrowers receiving it.    They know the details of those issues that might prove detrimental to receiving approval.




I've held preparatory conversations outlining the strengths and weaknesses ... the pros and cons ... of their mortgage application with them.  They've been made fully aware of their odds for mortgage approval.

So typically at this point, it's a matter of our "re-grouping", so to speak.  And then finding another way of addressing those issues raised during their Underwriting Review.

What are those issues that result in mortgage denial most often?  Those contributing issues are:


  • The Appraisal:  Value Concerns and Property Condition issues are the most commonly raised flags
  • Something new (and adverse) has appeared since the Credit Report taken prior to Mortgage Closing.  (Example: A new credit application, such as those for a furniture or vehicle purchase or the appearance of a missed payment)              *Be Aware:  Lenders are required to reverify Credit and Employment within 10 (ten) days of Mortgage Closing.
  • Employment changes  (See above re-verification info) 
  • Income changes  (Loss of income, reduction in hours, reduced overtime)
  • Debt to Income Ratios  (A result of "new/additional debt" or reduced income)
  • Money in bank accounts have been moved or unaccounted cash deposits were made


It's important to know:  Receiving a mortgage denial in and of itself does NOT damage your credit score.  So do not fear that moving forward. 

But ... what comes next?


Continue to talk with your Mortgage Originator. They will provide the details as to the findings of the Underwriter and your denial.


Listen carefully and follow their instructions to address the issues raised.  Keep an open mind and consider/discuss all options available to you.


Many times issues and problems can be resolved easily and quickly and not derail your home buying transaction.   For those issues that demand more time and attention, it's vitally important to follow the advice of your mortgage originator.   


Focus razorlike on those issues contributing to the denial.  Roll up your sleeves and get back to work.  If credit damage was the culprit ... repair it.  Rebuild financial accounts, pay down debt, or rectify employment concerns. 


If an appraisal contributed to the denial received, consider all options available to you prior to moving forward.  Sometimes, appraisal concerns and issues can be negotiated items between Seller and Buyer, and thus resolved.  Remain in close communication with your agent and lender for advice resulting in the quickest and best results.


As I said above, experiencing emotions throughout your home buying and financing process is only natural and to be expected.  The buying and financing of a home is a big step in someone's life.


Just don't let the emotions run away with you, blind you, slow you, or keep you from taking actions on your own behalf.  That advice is especially key when a denial for mortgage is received.


Stay calm.  Let the emotion of determination drive you forward. 


Confer with your mortgage originator.  Gather the facts that contributed to the denial, then take those actions that will reap you more positive results.  


And remember:  Should reach a point where your present mortgage originator is unable or unwilling to work with you towards the securing of a more positive result, you always have the option to search for a new lender.  Different, more favorable mortgage programs and varying options for financing and financing service may exist elsewhere.  


Don't give up!


* Looking for financing answers, options, solutions, and experienced assistance?
Are you hoping to Buy, Refinance or purchase an Investment Property in New LenoxWill County, or elsewhere in the Chicagoland area? 

Contact me! 
I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.
I'm easily found at:
Gene Mundt 
Mortgage Originator -NMLS #216987 - IL Lic. 031.0006220 - WI Licensed
American Portfolio Mortgage Corp.
NMLS #175656


Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281


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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656


Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 


Your Referrals & Testimonials are Always Greatly Appreciated! 


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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 03/14/2019 01:00 AM
  2. Sally K. & David L. Hanson 01/16/2019 11:23 AM
  3. Gabe Sanders 01/28/2019 10:00 PM
Lending / Financial
Illinois Will County New Lenox
Home & Credit Savvy
Consumer Mortgage Tips
mortgage advice
credit advice
mortgage information
mortgage denials
talk to a lender
emotions in the homebuying and financing process

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Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Gene. This is excellent information. The trick is to deal with someone like you who understands.

Jan 15, 2019 10:10 AM #1
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Thinking back to the mortgages I have taken out, I have not had the in-depth and valuable conversations with my lenders as you provide here in this blog.  Maybe because I'm a Realtor, they skip these discussions with me but it makes me think you are one of a kind!

Jan 15, 2019 07:05 PM #2
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

It is important for home buyers to work with a loan officer like you who has the knowledge and experience to help them.

Jan 16, 2019 04:40 AM #3
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Gene, can only imagine the wild ride of emotions if a borrower receives a denial.  Hope they listen to your advice if they do.

Jan 16, 2019 06:11 AM #4
Amanda S. Davidson
Amanda Davidson Real Estate Group - Alexandria, VA
Alexandria Virginia Homes For Sale

Gene, your advice is priceless and this post is so well written. Receiving a denial is hard on everyone but, devastating for a borrower. I hope if someone receives a denial they've selected a lender as qualified and caring as you are so that they understand what to do. 

Jan 16, 2019 06:27 AM #5
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is great information to share with prospective mortgage borrowers.

Jan 16, 2019 08:09 AM #6
Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana!

Hi Gene loan denial happens rarely with our clients but it has and the best path forward is to make a plan to do it again in 6 months, 1 year, whatever it takes. Keep the eye on the ball (goal).  Excellent post!

Jan 16, 2019 02:36 PM #7
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

A great message to buyers Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

Jan 16, 2019 03:09 PM #8
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Gene and great information that is great for buyers and how to look at thinks.  Great feature and I would like to reblog it in a couple of months is that okay.

Jan 16, 2019 07:03 PM #9
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for the super advice and information, Gene.  I hope those facing this issue will see your post.

Jan 17, 2019 04:52 AM #10
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Gene - simple words and very effective.   It's not magic, knowledge is important.  Trust the process. 

Jan 17, 2019 06:44 AM #11
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

There's so much emotion that goes into buying a home and you've displayed exactly that.  Receiving a decline on a mortgage is not a good feeling.  It leaves borrowers feeling less than adequate, so explaining how that can happen, as you've done, is a great way to help them understand that it's not the end of the world.  They CAN turn that around!  Great post!

Jan 17, 2019 07:22 PM #12
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

As long as you’re breathing above water, ito probably going to be fine. In five years this probably won’t matter. :)

Jan 17, 2019 11:56 PM #13
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

That level of emotion can be the death of a person’s confidence. Keep up the momentum

Jan 17, 2019 11:58 PM #14
Debe Maxwell, CRS | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Stay calm and call Brotha Gene! Wonderful post (and very eye-appealing to by-the-way). Emotions run high when you're about to make the largest purchase you've ever made. So, having someone to guide you through the bumps in the process is so important. As you mentioned, most all of the big hurdles can be overcome - if emotions run high, that tends to get in the way though. So, staying calm is important!

Happy Friday!

Jan 18, 2019 10:05 PM #15
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Gene, what a wonderful post, I find it that in a Real Estate Transaction the better we manage the emotions of our clients the better the result will be and situations like this can be handled when everyone is on the same page, Mortgage Lender and Buyer's Agent,  Endre

Jan 18, 2019 11:20 PM #16
Sharon Miller
RE/MAX Platinum - Crane Hill, AL


Another great article! I wish more prospective buyers would take heed of what you have presented here. I deal with customers on an irregular basis who are denied a mortgage for reasons which have nothing to do with their qualifications.

Here's a sampling, "I am a fulltime resident of Virginia, attempting to purchase an improved lake property in Alabama. The property sits on seven acres. My mortgage lender in Virginia, who over the year's has serviced our family on multiple occasions, denied our application. The underwriter stated they don't finance improved properties which include that much land."

I make it a specific point to educate/coach my potential buyer's......consider as an option, working with a local lender, as they are familiar with the area conditions/situation. I just assisted a couple purchasing a small farm and home with a rental mobile unit on the property. They spent the better part of three weeks repeatedly being denied mortgage financing because of the rental unit. I provided them with the names of four local banks who make mortgages and hold the paper. This couple was approved for a mortgage within four business days. 

The knowledge and experience provided by people such as yourself, often means the difference for others, between achieving success and suffering disappointment.

Let's make it happen!

Jan 19, 2019 07:39 AM #17
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi Gene... loved this post. Fortunately, I can't remember working with a client who was denied... but your advice is something to keep note of in case the situation ever arises. The main thing is not to panic and do anything stupid.

Jan 21, 2019 02:29 PM #18


Feb 08, 2019 06:15 AM #21
Linda Metallo DiBenardo
RE/MAX Impact, Lockport, Illinois - Lockport, IL

Sound advice as always Gene.   Especially important is that last paragraph about changing lenders when necessary.   I think we all have had deals saved when buyers got denied for a loan and then got approved with another lender.

Feb 15, 2019 05:38 AM #23
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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