You might think that getting pre-approved for a mortgage means you are guaranteed to get a loan. However, that is not always the case. There are many reasons why a pre-approved mortgage can get denied, and some of them are avoidable. Here are some of the most common ones:
Lenders check your credit score when you apply for pre-approval, but they also check it again before closing the deal. If your score drops significantly, they might reconsider your eligibility or offer you a higher interest rate.
Lenders want to see that you have a stable and reliable source of income. If you switch jobs, lose your job, or have a decrease in income, they might question your ability to repay the loan.
Lenders also look at your debt-to-income ratio, which is the percentage of your monthly income that goes towards paying your debts. If you take on new debt, such as a car loan, a personal loan, or a credit card balance, you might exceed the lender's threshold and jeopardize your approval.
Lenders want to see that you have enough money for the down payment and closing costs. If you make a large purchase or withdrawal from your bank account, they might suspect that you are using borrowed money or have insufficient funds.
Lenders use an appraisal to determine the value of the property you want to buy. If the appraisal comes in lower than the agreed price, the lender might not lend you the full amount or require you to pay the difference in cash.
Lenders want to make sure that the property is in good condition and meets their standards. If the inspection reveals major issues, such as structural damage, mold, termites, or code violations, the lender might ask you to fix them before closing or back out of the deal.
These are some of the top reasons why pre-approved mortgages get denied, but there are others as well. To avoid them, you should maintain your credit score, income, and debt level, avoid making large purchases or withdrawals, and be prepared for the appraisal and inspection process. By doing so, you can increase your chances of getting approved and securing your dream home.
We hope this article was of value to you. For more great tips, bookmark our site and for all your mortgage needs, visit Mortgages by Richard.
Laura H. & Christopher M.
We were initially denied by a lender and when our possibilities were limited, Mr. Krauss helped us achieve our dream of getting a model home. My husband is a Veteran and he informed us of discounts and grants that we were not aware of.
I was well informed every step of the way never left me guessing all ways their when I had a question all ways very professional and respectful I had a pleasant experience.
Consistent communication and being able to trust the process. Richard closed my purchase after it was denied by another lender due to my low credit.
Richard's quick response to any issue or questions I may have had. And his expertise in getting it all handled quickly. I am Self Employed, he was able to close the loan before the due date.
Richard has successfully completed several refi’s for us which is why we brought our latest refi need to him. Our communication was excellent and our current refi went smoothly.
Richard was able to close my VA Purchase ahead of time with a low credit score of 520. His expertise overcame every hurdle within the process.
Richard took the time to help a homeless disabled Veteran into a new home. No one would help except for him. He explained how to qualify and executed my purchase ahead of schedule with the builder!
I was in an active Chapter 13 Bankruptcy, Richard was able to contact the court for approval and assist with my new purchase. He then provided me with the SAH Grant information for disabled Veterans and helped with my disabilities in the new home.
Richard is my old high school friend. We both served in the military, and he was able to explain how I can purchase with a lower credit score. My family has a beautiful home and we are able to start our next chapter!
Richard executed a Cash Out refi to purchase an investment property. The loan was approved withing 5 Days. Extremely quick turn around and awesome communication. He always answered my questions.