Everyone has told you to get pre-approved before you start your house-hunting to avoid disappointment. However, in some cases, it is possible to be denied a mortgage even if you have been pre-approved. Below are several reasons why that can be the case.
Loan requirements change:
Under the original requirements, all may have been fine, but by the time you go to get the mortgage, the lender who initially gave you the pre-approval could have changed the initial requirements, such as an increase in the credit score that you don’t fit to. Sadly, in this case, you have to start over with a different lender.
Yes, debt plays a big role indeed. The pre-approval is usually based on how much debt you would have had at the time of the process. However, if you have accumulated debt by the time you go get the mortgage, you will get denied. Buyers need to manage their finances very carefully until they have the cash in hand to buy the house. You are only halfway there with the pre-approval, and sadly circumstances can change with the lender.
Change of jobs:
Your lender needs to know that you are in a job so that you are receiving income and can afford to pay this mortgage. Changing a career between the pre-approval and the loan receipt could disqualify you from the process if the lender thinks the job or salary is inadequate. However, changing jobs in the same industry may not be an issue, but any drastic change can hurt you.
A hit to your credit:
As mentioned in the earlier paragraph about debt, if your credit score changes for the worse, there may be trouble. Any small debts should be paid on time because these documents are going to be checked again when you see your lender for the loan. Again, it’s about financial management – at this period in your life, it’s best to keep expenses on the low.
This can happen once in a while. The borrower may try to provide fake information to the lender but will most likely get caught after the bank and lender double-check all of the information.
Protection from denial:
One of the most important things to do before going through all this process, yet again, is to educate yourself about all the details to avoid any of the perils. Constant communication with your lender, properly managing your finances and staying in control of your situation will help to make sure that you get the loan after the pre-approval