Home Buying in 91354>Question Details

Mystery, Home Buyer in 91354

Does pre-approval for a loan usually end with an actual approval?

Asked by Mystery, 91354 Tue Feb 23, 2010

I'm wondering how common it is that a borrower who is pre-approved for a loan, ends up being unable to get actual approval? Is this a common occurence, or the exception?

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Before a pre-approval is issued the lender normally requires 2 years tax returns, current bank statements showing proof of funds, runs your credit report to see how much debt you are currently carrying as well as your FICO score. With all of this information a bank can see your financial position and be able to issue a preapproval with a reasonable amount of confidence that they will fund your loan. The only thing you should adhere to after submitting these documents to the lender is to not run up additional bills that will appear on your credit report or deplete any existing money in your bank accounts. They will ask for updated information from you before you close your loan and if anything major has changed your loan will be denied.
0 votes Thank Flag Link Tue Dec 9, 2014
Hi Mystery!

I would say it's not that common as long as the buyer has been honest and doesn't go out and buy a car or some other large purchase in the process of getting a loan.

Unfortunately it does happen though. That's why it's important to have a lender you trust and to have the buyer double app with the lender of your agent's choice. Better to be safe than sorry!
0 votes Thank Flag Link Fri Sep 13, 2013
Incurring additional debt during the application process can cause a loan to be denied.
0 votes Thank Flag Link Mon Oct 15, 2012
Mystery, A pre-approval should always be as good as loan approval provided the information given is 100% accurate. The real question is how often the the information 100% accurate. That would be closer to $65% Tony Lewis RE/MAX of Valencia 661-702-4722
Web Reference: http://www.TonyLewis.com
0 votes Thank Flag Link Mon Oct 15, 2012

This depends on who is issuing the approval. Even though the basic process is the same, not all mortgage professionals are created equal - and not all mortgage companies have the same exact requirements. If the approval is done correctly and credit scores, assets, pay, and situation are documented accurately on a 1003 loan application paired with a good loan officer I would say the chances are very high in closing. This should be common place but there are lots of possible pitfalls - not verifying what a buyer tells you is a common one I run into when I talk to loan officers. If you don't verify everything - it's just a pre-qualification. Then it's a crap shoot.

0 votes Thank Flag Link Fri Jun 15, 2012
It all depends on how forthright the borrower has been with the lender in the initial stages of the loan process. Most house hunters get a pre-approval up front and that pre-approval could be based solely on a credit check or a more in-depth process. In the majority of the cases that I've handled a pre-approval results in a final approval.
0 votes Thank Flag Link Thu Jun 14, 2012
Often yes it does. It all depends on the lender you are working with. I have a few I refer my clients to so that they have the best option. It all depends on how strong of a buyer you are. You could be making 100k plus annually but how much is your debt? See in the beginning stage or ore approval it is based on your credit score and income but later during real approval, your debt to income ratio is considered and that can change things significantly. I had a user recently who was looking at 450k plus homes because he is a doctor and his credit was in the high 700's...however when the lender I referred him to took a close look at his debt, his budget was really more like the 300k and below range.

Good luck
0 votes Thank Flag Link Thu Jun 14, 2012
When my clients ask for a referral and i give them cards for local lenders who I trust to do a good job.

Knock on wood that has never happened YET :) If they are iffy they get docs first before sending people down the road of self distruction.

If your in Hampton Roads and would like to use one of them go to http://www.grapevinereferrals.com
0 votes Thank Flag Link Wed Jun 6, 2012
It all depends on whether the documentation he/she provides supports the information and figures that are on the application. Many times what a borrower states she/he earns is completely different from what the bank's underwriter will allow.

Hope this helps.
0 votes Thank Flag Link Wed Jun 6, 2012
Although this is a dated question, it is a great questoin.

This should never occur with a really good loan agent that really has you preapproved (underwritten by the lender with only contract and appraisal as conditions).

But it does happen...preapprovals are issued through many websites with the borrower answering questions and the bank assuming that supporting documentation will be available. This is not an approval. It is a credit approval. Credit has been pulled, but no documentation authenticated or funds verified or employment verified.

But let's say the preapproval is a bonifed true approval. How could it be unable to get approved?

The borrower could lose h/quit their job. Lenders call to verify employment the day of funding!!
The borrower could lose all his down payment money (stock crash, gambling,)
The borrower could run up credit cards (or worse buy a car) to furnish the home and completely ruin the approved ratios. Lenders run a final credit at funding!!
Or...the money was brought in from another country and taxes have not been paid and they find out that they will owe more on taxes than they can afford (i have seen that one first hand!!)

It is not a common occurrence. But it can happen.

We never say never...but take every precaution for it not to occur.
0 votes Thank Flag Link Tue Jun 5, 2012
I am not a lender but an experienced agent who sees this happening more and more all the time. Sometimes it's not you though, it's the lender. Don't give up! Some lender's guidelines are more difficult than others. If one Denies try another. A good lender is Mike meena with Augusta Financial. 661 260-2970
Web Reference: http://www.MikeMeena.com
0 votes Thank Flag Link Thu Aug 12, 2010
Pre-approval can be 100% as good as loan approval! The difference is that the lender will use the identical information that the borrower submits but then varify the information. Many borrowers leave out pertinant information that can be discovered easily by the lender. My suggestion is for a buyer or seller to work with a lender or Realtor that they trust to be looing out for them. Share information honestly and find out the real loan approval up front. This will allow a buyer or seller to maximize their position. Let me know if you would like to buy or sell a home in Valencia, Stevenson Ranch or any area of the Santa Clarita Valley, I'll introduce you to trustworthy lenders and you'll be in a great position to take advantage of the current real estate market!
Your frend & Realtor,
Tony Lewis
RE/MAX of Valencia
Web Reference: http://www.TonyLewis.com
0 votes Thank Flag Link Tue May 4, 2010
Depends--did you add any debt since since the pre-approval, did your credit score change for the better/worse, any changes in income/jobs, etc.
0 votes Thank Flag Link Sat Feb 27, 2010
Most of the time if you get a pre-approval from a lender,providing the appraisal comes in close to the ratio of your mortgage requirements you should be fine.
0 votes Thank Flag Link Sat Feb 27, 2010
You start with a pre quailification which basically checks your credit score along with the income and expenses you state. Once it is submitted and verified along with employement, then you become pre-approved. Most pre-approvals get approved based on purchasing a property that is within teh amount approved for. However maybe half pre-quailificatiosn these days are not approved for a loan. Online approvals are near worthless, they need to come from a reputable company. Myt advice is to use a local and trusted mortgage broker or bank. i hope this helps
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Feb 23, 2010
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