Home Buying in Los Angeles>Question Details

Dazednconfus…, Home Buyer in Los Angeles, CA

Our bank gave us the full approval for our loan then two days later said it was denied because of the debt-to-income ration, can this still happen?

Asked by Dazednconfused, Los Angeles, CA Tue Sep 15, 2009

We were to close in the next 3 days.

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Unfortunately, many lenders have not adjusted to the more rigorous requirements. Once upon a time, they could take your information over the phone, and get your paystubs and W-2's later. If it came in at least close, you'd still be okay. Those lackadaisical days are over.

I'm sorry for your frustrations.

What type of loan were they trying to qualify you for? Often one loan program won't fit you when another one will. Do not give up just yet! Talk to a couple of lenders and get commitments in writing. You may have gotten a lender that is not as detailed as you deserve. Have no guilt in moving on and doing so quickly.

Best wishes for success!
0 votes Thank Flag Link Wed Sep 16, 2009
My guess is what happened is the loan officer may have not calculated everything correctly up front. But when the loan package went into the full underwriting process, the underwriter denied it.

Since the qualification process for a loan has become so much more rigorous these days, if you are anywhere close to the borderline of qualifying, it's best to ask that your loan gets *fully underwritten* by the bank underwriter before your spend a lot of yours and your Realtor's valuable time searching, and also put up deposit money, pay for an appraisal and an inspection. Fully underwritten is different than the loan officer quickly glancing at your paystubs and credit and then sending you a pre-approval letter.
0 votes Thank Flag Link Wed Sep 16, 2009
Dazed and confused: You will need to ask the person (mortgage broker, banker, or loan officer) who has been handling your loan to ask what has happened because there area a number of possiblities.

Questions:
1. Was there an error in calculating debt to income in the first place?
2. Was it something that changed with my qualifications...or something that changed with bank guidelines?
3. What made the debt to income too low....did they give me less income or more debt.....and why?
4. Have you changed lenders for some reason (if you are using a broker)
5. Did it occur because of something that showed up new on my credit report?
6. What can I do to tweak my debt to income so the loan can proceed?

Janet Guilbault
Mortgage Banker/Broker
RPM Mortgage
925-212-6347
0 votes Thank Flag Link Tue Sep 15, 2009
Often times, during escrow, clients make changes that affect their debt to income ratio during escrow, such as buying a new car, increasing their credit card debt, and the like. Small changes, which may seem insignificant to you, can make a difference if you are right on the border of qualifying. In addition, behind the scenes, the lender's guidelines could have changed, throwing of your qualification ratios. Sit down with your Realtor, mortgage broker, or banker, and ask the question, "What has changed and how can we fix it?" It may require shopping for a different loan with looser underwriting ratios, or it could be as simple as clearing up a credit glitch.
Good Luck,
Debbie Bremner
The Bremner Group at Coldwell Banker
Realtor for 33 Years
Blogging at: http://NeighborhoodNotes.wordpress.com
0 votes Thank Flag Link Tue Sep 15, 2009
Is this an FHA or conventional loan? I am happy to refer you to one of the best lenders in the Universe (in my opinion) who will tell you whether you will be able to get a loan if you'd like his contact.
0 votes Thank Flag Link Tue Sep 15, 2009
Thanks for the reply. Actually, there were no changes [on our part] since the full approval to the denial two days later. Our income and debt ratio were the same. It should even be lower because we pay off our bills every month. This is just so frustrating.
0 votes Thank Flag Link Tue Sep 15, 2009
Not sure why they approved it and then denied unless your debt ratio increased during escrow. Often banks will re-run credit before funding and can deny if the stats have changed. You may be able to work it out or come up with cash to pay a difference in what the bank will loan. Good luck.
0 votes Thank Flag Link Tue Sep 15, 2009
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