Chances are, you sucked at soccer. Now whether anyone told you this or not, is actually more important than the actual suckiness itself. But you most likely got a trophy for being the worst kid on the worst team. Some people view this as sweet and fair. However I view this as a financial disaster waiting to happen. I’m not suggesting that the worst team in the league is executed. I’m just suggesting that they have to make do with their juice box, oatmeal cream pie, and not a trophy. Sometimes knowing the truth allows a person to move on. And when appropriate, do better. But when we coddle peoples’ failures, and make them un-failures, then we risk hurting the person more.
Has a bank ever turned you down for a simple mortgage loan? And by simple, I mean a 30 year fixed mortgage. If so, then you probably shouldn’t buy a house in that moment. If you have to “get creative” with the loan (e.g. interest only, Adjustable Rate, etc.), then you really can’t afford the house itself. You failed to qualify. But it’s what you do next, that makes all the difference in the world.
When rejected for something significant like a mortgage or a car loan, you basically have two choices. If you choose wrong, then your ignorance of failure (in a bad way) will persist. Here are the two choices.
- Learn from your financial failure- If you choose to learn from your failure then this means that you take the time to assess the situation, and make yourself better. Did one bank reject you for a loan? I don’t necessarily suggest bulling forward to find a bank that won’t reject you. You need to take the time to figure out why the bank viewed you as a poor credit risk. Use the failure as an opportunity to succeed. Don’t ignore the failure, which would direct you toward a bigger failure.
- Get a yes- “Mom, can I go outside and play?” I ask. “No,” my mom says. “Dad, can I go outside…” You know how that goes. Getting the answer that you want to a question isn’t progress. Don’t mistake “getting a yes” for perseverance. Perseverance is way over-rated. If a legitimate bank rejects you, don’t keep trying to find different ways to borrow the money that you never should have borrowed. It’s not your RIGHT to borrow money. It’s privilege. And it’s a privilege that you haven’t earned.
There are a great number of people who purchased homes between 2001-2007 that have an incredibly rude awakening coming their way. They bought something that they couldn’t really afford. I refuse to place blame on the banks for this situation. Since when do we rely on other people to tell us how much money we can afford to spend? Your bank may have loaned you money that they shouldn’t have loaned you, but don’t forget that means that you borrowed money that you shouldn’t have borrowed. You will never get rejected for a loan that you can truly afford. And you will never make a poor housing decision if you know what you can truly afford.
Rejection is a tell. Rejection is a clue that something isn’t right. The car dealer tells you that you can’t get the car deal that you want? Then this is a major clue as to what the situation really is. I have no problem with the popular concept of “rejecting rejection”. Often times I try to push through business and financial adversity. But “rejecting rejection” means that you still need to proceed cautiously and responsibly.
Be tenacious. But don’t be tenacious for the wrong reasons. Fight for your right to succeed, but don’t fight blindly for a “yes” in the face of an important “no”.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.