When it’s time to purchase a home, one of the first things you should do is get pre-approved for a home loan. In this highly competitive market, mortgage pre-approval is “the ace up your sleeve” because it emphasizes that you are serious about buying a home and have the finances to back you up.
While having a pre-approval letter gives you an advantage at the negotiating table, it’s not a guarantee that you’ll close the loan.
That said, it may surprise you to learn that lenders may turn you down for a loan even if you get pre-approved. Let’s look at some of the reasons why this may happen and how to prevent it.
The pre-approval process is quite similar to final approval, wherein lenders gather your financial documents and see where you are at. Based on all your documentation, a mortgage professional can tell you what size of the loan you are qualified for and the interest rate you may get.
You can also receive an estimate of what your closing costs will be. The question is, why can you get denied even after pre-approval?
Significant changes can occur with your financial situation between pre-approval and closing. This is the main reason for getting turned downed after pre-approval.
Lenders will go through all your financial documents once more as you approach closing day. If they discover that your creditworthiness or financial standing has changed significantly since pre-approval, they can use this as a basis for denying your loan.
Here are the top reasons why your loan can be in jeopardy even after pre-approval.
Credit reports pulled during pre-approval are usually good for 120 days. If you don’t close a loan within that time, lenders would need to pull a new credit report once more.
If you’ve been late on payments, closed any of your accounts, or have taken on new debt since pre-approval, your credit score can take a hit and cause a denial on your loan.
Lenders may check if you have incurred additional debt that may affect your DTI. For example, after pre-approval, buying a new car is not a good idea since the new loan can bump your DTI above the limit.
Mortgage approval requires a history of stable and reliable employment. Changing jobs during the home buying process can impact your final loan approval.
There’s still hope, though! If you can prove that you have the same salary or higher or get a job within the same industry, you can still close the loan.
If you go from salaried to commission or completely change careers, lenders may have a hard time judging your future stability.
Making financial changes can sabotage your pre-approval, so it’s better to know what you should do and not do between pre-approval and closing.
That said, the best thing you can do between pre-approval and closing is to keep things as they are from a financial standpoint.
Do you need help in closing a home loan fast? Our loan officers can guide you on what steps to take to close quickly and with ease. Give our loan specialists a call or contact us through our website to learn more. We’re always here to help.
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 328663 CA BRE 01856458
190 W 3rd street
Santa Ana, California 92701
Fax: (714) 845-0414
Alfa Investments & Loans strives to ensure that its services are accessible to people with disabilities. Alfa Investments & Loans has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Alfa Investments & Loans makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows alfalending.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Alfa Investments & Loans accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Alfa Investments & Loans continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Alfa Investments & Loans website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Alfa Investments & Loans website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: firstname.lastname@example.org