Home Buying in 30082>Question Details

dcomptonwfh, Home Buyer in Smyrna, GA

can i be preapproved for an FHA home loan then denied by the underwriter?

Asked by dcomptonwfh, Smyrna, GA Fri May 18, 2012

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Rodney Mason’s answer
Until you have signed all of the documents at closing and been given the keys, your loan can be denied at any time.

A true "Pre-Approval" should only be given after an underwriter has reviewed your file. Due to 2010 RESPA changes, most lenders quit issuing Pre-Approvals a couple of years ago. You were most likely Pre-Qualified instead of Pre-Approved.

You should have been given a reason on exactly why your loan was denied.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle Renovation | VA | USDA | GA Dream | Jumbo Financing
1 vote Thank Flag Link Sat May 19, 2012
In my opinion, Rodney Mason here, gives the best answer. I will use it from now on. Carl
0 votes Thank Flag Link Sat May 19, 2012
Thanks everyone. Yes I was pre-qualified not pre-approved. Your answers are very much appreciated.
0 votes Thank Flag Link Sat May 19, 2012
If you don't know the reason for the denial, it's a possibility that it was the property. It's all too common these days for loans to get denied after the underwriting process due to new regulations, so don't feel like you're alone.
Web Reference: http://youtu.be/TsCDT9h4Qas
0 votes Thank Flag Link Fri May 18, 2012
Yes, it can and does happen. Lenders are now pulling credit a week or two before closing to see if Buyer has opened any new lines of credit or made any recent large transactions. If you get pre-approved, it is best to not go out and buy any new cars, or open new lines of credit until after you close. Also, most pre-approvals are contingent on final Underwriting Approval. And though a Lender will help you through the approval process from start to finish, the Lender typically has no control over Underwriting declining a loan.
0 votes Thank Flag Link Fri May 18, 2012
Sure. A pre-approval is a credit report and an estimate of your ability to obtain a loan without verifying what you say your income and assets are, in the case of FHA, the ability to obtain with a low down payment, say 3.5 to 5%, usually. But the pre-approval may be loosely given without examining the credit report of judgements, or other shortcomings. Other than a conversation with you and the credit report, there is no confirmation of anything you claim. When you provide the 2 federal 1040 tax returns, the pay stubs, the current bank statements, the lender will have its criteria they look for in a borrower. The lender with the money has will be interested in the property and its condition. What is the basis of the denial? Just ask.
0 votes Thank Flag Link Fri May 18, 2012
Yes. But more than likely you did not have a full approval. You were probably pre qualified but not approved.

Typically if an approved buyer is turned down in underwriting its because something changed. New information on the credit report, gap in employment, things like that.
0 votes Thank Flag Link Fri May 18, 2012
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