A DENY decision is pretty self explanatory...back to the drawing board
An APPROVE decision means you are most likely approved. From there the lender should ask you to provide paystubs, bank statements, W-2's etc to support the information provided over the phone.
A REFER decision means an actual underwriter would need to review a complete file (all income and asset information must be provided) to make a ruling on things. REFER usually means there are layers of risk to the file which must be throroughly explained to determine if there really is a risk in loaning you $$ or if there is enough strength in the file to offset the risk (called COMPENSATING FACTORS). Once you have provided documentation it's usually no more than 5-7 business days, worst case, to get an answer.
The last thing that could factor in is the property itself. If you have identified a property and signed a purchase agreement it could be possible that issues with the property are holding things up. In today's mortgage environment the property is just as important as the borrower's qualifications.
At the end of the day, I'd recommend speaking to another lender - someone local and reputable - to get a 2nd opinion. Because while there may be a perfectly valid excuse for delays the fact of the matter is that customer service in the mortgage industry is not what it once was and your loan officer should at least be able to explain to you the delays and some sort of reasoning behind them. At least it may give you some peace of mind.
Just to ask, was this a mortgage broker, or a mortgage lender? This website explains the difference and many other things about protecting yourself
I suggest getting pre-approved by more than one company and comparing their good faith estimates. Keep in mind, things may change (for better or worse) when your information is sent to the underwriter.
I also suggest seeing if you qualify for any of the Rural Development or MSHDA loan programs.
Man I am glad I am here!
Thats too long. Maybe they forgot about you! Call Linda at Michigan United Mortgage. http://mumloans.com/
She is money, not literally, but she works so hard for her clients. Bob may know some people in your area that you can rely on as well.
When you need an agent to help you buy, let some of your Trulia agents you see active on here compete for the position. After all we donate our time to help break down the confusion that is home buying.
Out of curiousity who is the lender you have met with, and where did you find them?