Kimberly Kennedy
Saturday, August 20, 2016
Wednesday, August 10, 2016
Monday, August 8, 2016
Reasons Why Your Loan Could Be Denied AFTER Pre-Approval
This just happened to a friend of mine in my hometown in
Florida. They were shocked. I figured this was a good enough reason to do some
research, ask questions, and write a blog about it. So here we go, girl (or
guy):
Obtaining a pre-approval for a mortgage is one of the most
significant steps in the home buying process. In order to effectively find a
loan within your price range, you need to first BE AWARE of your price range.
By talking with a lender, like our amazing guys at Homeside (big ups to my
Homeside homies, Noah, Davis, and Charles!), you can determine what size loan
you qualify for. This pre-approval process is something that EVERY buyer goes
through if they are interested in using a loan to buy a home.
Some people assume that once you have pre-approval, all you
have to do is find a home to buy, sign some papers, acquire your funds and purchase
the home. But sometimes, you’re blindsided when you can’t get the loan you were
originally pre-approved for. In order to dodge this heavy bullet, you need to
have full understanding as to how this nightmare could happen. Here’s some of
the most common reason’s mortgages are denied, regardless of pre-approval:
A
Negative Hit To Your Credit
If you fail to pay your debts on time, or if you take on additional
debt- like buying a new car-, this can affect your credit score and lead to a
denial. For example, missing a payment on your credit card, can make your
credit score go down and could disqualify you from the loan credentials that
you had previously qualified for.
Mortgage
Fraud
Even though mortgage fraud is rare, it can still happen. The
most common type is when the borrower gives the lender wrong information at the
time of application. Somewhere down the line the bank or mortgage company does
their due diligence and finds out the borrower gave falsified information and
BOOM. It’s over. Moral of the story (takin’ it back to kindergarten, y’all)…
TELL THE TRUTH. Lying is never a good call.
A
Career Change
Your employment status is an important factor in determining
your eligibility for a mortgage loan. Your income and your employment history
will be analyzed because it’s vital that the lender know that you are capable
of paying the mortgage. A change in employment history may not disqualify you
for the loan, but it is best to talk with your lender to ensure this. If you
change employers but are doing the same work, it may not be an issue. But if
you completely change your income and job, you could put yourself at risk. If
you change your job after your pre-approved but before you buy a home, you
could find out that your lender does not consider your new job adequate for
paying back the loan. Also, some loans have employment history requirements. Like
an FHA loan, for example, has a minimum employment history requirement of at
least 2 consistent years.
A
Change In Loan Requirements
Sometimes lenders can change the requirements they have for
mortgages. Although this is rare, an example of this may be if the minimum
credit score requirement is 650 but the lender decides to increase the minimum
credit score to 680 for whatever reason. This can cause a change in your
eligibility and it might be best to seek financing elsewhere. After speaking to
our fabulous Homeside homie, Davis, he was quick to let me know that although
this is extremely rare, you will get notice if there is any MAJOR change in
loan terms.
Issues
With The Appraisal
If your pre-approval is contingent on a bank appraisal, you
may get in a situation where issues with the appraisal lead to the loan being
denied. For example, FHA loans have specific requirements regarding gas
stations. If a home is too close to a gas station, you can’t get an FHA loan.
If the bank appraisal determines that there is a gas station that is too close
to the house, you won’t be able to get the loan.
Protect
YoSelf
One of the most important things you can do when you buy a
home is make sure you avoid doing anything that can negatively impact your
credit score and to be sure you educate yourself on how credit works. Pay all
credit card bills on time, don’t take out any major debts, be consistent in
your employment, credit, and finances in general to ensure your not victim to
this unfortunate experience.
Reach out to me if you have any questions about pre-approval
or if you simply want to get pre-approved to buy a home. I can help. And our
guys at Homeside Financial are AHHHHHmazing and an absolute pleasure to work
with. You’ll probably love them as much as we do. Hope to hear from you soon. Cheers to you and
yours!
Better Homes and Gardens | Go Realty
859-598-9657
“Real
Estate is the art of being a valuable advisor, not a sales person.”
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