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Credit Standards

With the tightening of credit standards, more homebuyers find themselves rejected
when they apply for a loan. But after just one rejection, lending experts say buyers
shouldn’t give up – they may still be able to qualify for a mortgage if they keep
trying.However, buyers shouldn’t try again until they closely evaluate why the
lender turned down the original mortgage application and find ways to address the
issues in their second or third attempt, says Marisol Torruella, a loan originator
with the New York Municipal Credit Union. Applicants can, by law, find out why they
were rejected in a mortgage application. The Equal Credit Opportunities Act gives
lenders 30 days to tell applicants, in writing, the specific reasons why they denied
a loan.Some rejected borrowers may need to save for a larger downpayment or take
steps to improve their credit score.Some applicants may find that shopping around
for other lenders helps (particularly if the applicant has been a longtime member at
a credit union) or discussing other alternatives with the original lender.
Applicants could also consider different options, such as a loan from the Federal
Housing Administration (FHA), which has less stringent requirements. Surveys suggest
that most borrowers aren’t aware of FHA loans.

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