Many people fear meeting with a mortgage loan officer and their lending institution because they are afraid the loan officer will judge them if their credit or finances are not perfect. I can happily assure you that the loan officer does not care or judge your current credit or financial state, if they are any good at what they do.

That is because, the loan officer’s job is not to focus on where you are, their job is to focus on what they can help you achieve (which is, ultimately, to own a home or investment properties, or both, and be in a great financial position to boot). If you are not in the position to qualify for a home purchase right after meeting with the loan officer, that is perfectly fine. Do not be disheartened or feel defeated, it is normal. And do not shy away from continuing to work with the loan officer. They want to help you eventually get approved.

Everyone has to work from a place of not being able to qualify for a mortgage when they are young to a place that they can qualify for a mortgage later in life. You may no longer be young, and you may still not qualify currently, but that does not detract from the fact that you are on the same path that everyone has been on. The point is to get to the position where you can qualify, which is simply a matter of work.

Want to know something cool? Everyone can qualify for a mortgage, eventually. Everyone. All you need to do is take the advice your loan officer gave you when you meet with them over the phone or in-person and apply it. On top of that, you also want to focus on a few things to make sure you meet your goals.

Here are a number of steps to focus on while you are not approved for a mortgage, to help you make sure you will be approved later.

1. Focus on the steps your loan officer told you to take – If you were not approved, it was because of one or more specific reasons. Maybe your credit scores were too low, or you have too much debt, or you just opened a new business and don’t have enough years of income yet. Whatever the reason, your loan officer should have given you specific steps to take to remedy why you were not approved. For instance:
   • If your credit was not where it needed to be, you likely have to go a certain amount of time with no more late payments, or you have to pay down some credit card balances, or you need to remove some disputes or pay off a judgment. Magically, if you follow that advice, you will see your overall credit improve and fit the boxes required by the government programs. Often, credit scores can improve fairly rapidly, so it is not unusual to have credit get in range quickly.
   • If you need to show more assets, you can sell some things, decrease your spending, and save more money. Many people reach their goal of showing the assets needed withing just a few months.
   • If your debts are too high, you can work on paying them off. Again, sell some stuff. Or use a Dave Ramsey class or a financial coach to help you figure out the fastest way to decrease your debts and get into range.
2. On top of listening to the loan officer, here are a few other steps you should be taking to put yourself in a better financial and pre-approval position, regardless of timing.
   • Focus on your credit – regardless of whether your credit scores are the problem or not, you can almost always take steps while you are working towards approval to improve your credit scores even more. Better credit can improve your interest rates, the programs you qualify for, your mortgage insurance costs, and the purchase price ranges you can look at. Keep focusing on improving your credit no matter what. For extra information on credit, see this post.

• Save More Money – No matter if you are wanting to use a down payment assistance program, a program that does not require a down payment, or any of the traditional programs, having more money saved is always going to be better. The more money you have saved the stronger your file will look to the lender/government agencies. So, you can improve your qualifying ability once everything else is fixed and you are approved. On top of that, having more money puts you in a financially better situation for yourself. If repairs come up with the home, or you have other unexpected costs in your life that could cause you difficulty in making your mortgage payment, those extra assets you saved in reserve will be life preservers. And, mentally, you will feel more relaxed knowing you have some fallback money to rely on. Win-Win-Win.
• Do Not Open Up New Debt – If you are working towards buying a home, new debt could completely derail your opportunities. Any possible new debt you might have you should first review with your loan officer. Sometimes life events happen. Maybe you are in college and need to take out another semester of loans, or your car broke down so you need a new one. Just understand these new events need to be discussed with you loan officer first, and a plan put in place to decrease the likelihood of it causing you further problems with qualifying.
• Do Not Increase Your Current Debt Load – You may think this was discussed in the bullet point above, but this is a separate conversation. Most people out there have credit cards or some other revolving lines of credit (not counting business loans that are not personal debt). You do not want to increase the balances on any revolving credit, including credit cards. Increasing the balances you have on your current revolving accounts could both decrease what you can qualify for (because you now have higher monthly payments you have to make) and decrease your credit scores (because you are using too much of your available credit). If anything, you should work to keep your balances around where they currently are, and preferably, you should work to pay the balances down to almost $0. Having the balances near zero will likely give you a large boost to your credit scores, AND it will help you financially by saving you a boat load of interest costs.
• Do Not Lose Or Change Your Job – This is likely a no-brainer, but in the heat of the moment, sometimes people make bad choices to get out of bad situations. We completely understand. But you need to review any large financial changes like this with you loan officer. And preferably, though it may be difficult, you should review these scenarios before you act on the impulse or opportunity. Different job types and income types can have completely different requirements for qualifying, so you need to review the income and make sure it won’t impact your qualifying timing. Plus, if your income may be changing for the better, you could also be reviewing with the loan officer (or a financial coach) how to use the extra income to pay off debt or save money faster, in order to qualify easier and with better programs.

All-in-all, you can take Three things from this post:

1. It is perfectly fine if you do not qualify to buy a home right this second.
2. Never stop focusing on putting yourself in a better financial position, regardless of when you may buy a home. Keep improving credit, keep saving money, keep getting out of debt, keep making money.
3. KEEP TALKING WITH YOUR LOAN OFFICER! Your loan officer wants to have you approved to buy. It is in their best interest to help you get to a better spot. Even if it is going to be a while before you can qualify, touch base with your loan officer every month or every couple months and give them updates on where you are at. If any changes are coming, review that with them so they can tell you how that would affect approval and best ways to move forward. Your loan officer is on your team. Let them be a good team-mate.

Want to get more details on buying a home? Check out more posts by Midwest Money Mentor and enjoy your education.

And to give you a final note that has absolutely nothing to do with this post, here is a cool picture – this time of Space stuff (the Perseid Meteor Shower).