Financing in Clearwater>Question Details

Brad, Both Buyer and Seller in Clearwater, FL

Statistically, how often are pre-approved buyers denied loans?

Asked by Brad, Clearwater, FL Tue Apr 7, 2009

I was pre-approved for a home loan on Friday, made an offer on Saturday, accepted the seller's counter on Sunday and have an executed contract on Tuesday. My application has been in underwriting since Friday afternoon, and I haven't gotten an answer yet. My credit history is middle of the road, but my income is high. I'm starting to sweat and have to put money out for escrow and inspections soon.

Thank you in advance for your time.

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Well being on the Real Estate end of it I cannot quote you statistics but maybe I can help you sleep better by letting you know that Underwriting is taking much longer than it use to to approve someones mortgage. They are going over everything now with a fine tooth comb and asking for every little thing to cover themselves to make sure the buyer is worthy of their mortgage. If you have confidence in your mortgage broker or lender that did the preapproval letter I do believe you should be fine. As the lenders tighten up their requirements it is more important than ever to have a really experienced mortgage person in your corner. If you need a different mortgage broker for some reason and need a referral, I work with some awesome ones that know how to get the job done!

For those folks that do end up getting turned down, I would guess typically it is because something has changed, maybe they bought a big ticket item, maybe they make less money than they said, or maybe they stopped paying some bills to show money in their savings account causing their credit scores to nose dive. Again great brokers will explain to you what to do or not do while waiting for approvals.

I wish you the best of luck, Talk to your broker. I am sure they will explain underwriting is taking longer these days and should hopefully be able to make you feel more confident in the process. Congrats on the purchase of your new house!!

Patty Neri
Keller Williams Realty
Palm Harbor, FL
Web Reference:
1 vote Thank Flag Link Thu Apr 9, 2009
Since your loan is with the underwriter I would not recomend getting another broker.
1 vote Thank Flag Link Thu Apr 9, 2009
Joe the Builder, I loved your response.

I definitely agree that home ownership is a priviledge. I have been in the home I currently own for 7 years. I have remodeled almost the entire home. I bought the home when I was single, so it's a smaller home. I am now married with 3 children, and this home is way too small to allow my young children to grow up in. If I didn't need to move on, believe me I wouldn't. Especially in this marketplace. I think of the $70K I left on the table by not selling in 2006, but am reminded that the extra profit would most certainly have come at the expense of someone else.

As for the responsibility of owning a home, I'm well aware of the risks involved. There are risk for not only my family's financial well being, but for the overall economy's financial well being. Believe me, I don't plan to fail. In fact, I have a plan to succeed. My wife and I have budgeted our next ten years at 75% of our current income, and our plan is to be debt free, mortgage included, by the end of 2019. The other 25% of our income will go towards savings, college funds, and retirement.

I appreciate your comments, because there are many out there that don't consider the future when making financial decisions, but I think we've got a good plan in place. That being said, a plan is only guaranteed to work if it's God's. I've seen this first hand, going from just me to my wife and three in 5 years. Anything can happen and the best we can do is try to prepare.
1 vote Thank Flag Link Wed Apr 8, 2009

If you have a true pre-approval, you should already have an underwriting decision and it would only take about a week to two weeks to close a transaction. The problem is that most brokers not knowing the difference between pre-approval and pre-qualification issue pre-qualifications calling them pre-approvals. Since most likely you have a pre-qualification and the loan was "NEVER" submitted to an underwriter for a pre-approval, your loan could now take up to 4 weeks just to get through underwriting. The fact of the matter is that underwriting staffs at most if not all lenders are cut down to skeleton crews and the amount of applications have increased considerably lately with historic low rates, rock bottom home prices, and incentives like the $8000 tax credit. This is causing longer turn times. FHA loans do not have to take longer in underwriting. A good broker will know of the proper investor to take the loan to that has decent underwriting turn times and get your loan through in a timely manner. Hope everything works out for you Brad. If you have any issues, feel free to contact me.
1 vote Thank Flag Link Wed Apr 8, 2009
Thanks guys! You know I'm looking for a little peace of mind right now and you just provided it. I'll let you guys know how it goes. Ryan, I'll contact you if something falls through with the lender I'm using.

This is an FHA loan, so perhaps David is correct. I hope it doesn't take too long though. I'm closing on my current property on the 24th, and have to be out by the 23rd. Last thing I want is my belongings in a moving truck trying to find a rental last minute. All that plus I have 3 kids.
1 vote Thank Flag Link Wed Apr 8, 2009
Stop sweating, you are fine. Underwriting takes forever sometimes. Mine personally took a week. However even with a mortgage commitment in hand, that still does not mean you are free and clear. They can deny you at any time. No loan is fully approved until it is closed on.

It's a stressful manner. However, with that said, I feel you will be OK. Just wait it out, and ALWAYS ALWAYS ALWAYS supply them with documents they need on time, as to not delay your closing.

If you used a big bank like Chase- your waiting period may even be longer.
0 votes Thank Flag Link Fri Sep 27, 2013
Lot's a great respones here that should give you some peace of mind.
Brad, success in buying a home relies in a very large extent on the lender you choose.
More buyers are left at the alter by Wells Fargo than Achieva.
The cause is the thouroughness of the lender at the time of the application and, even more imporantly, the willingness of the lender to invest the resources to clear the obstacles before the week of the scheduled closing.
If you are working with a broker, and using a local lender the sun shines brighter on your prospects.
You don't have to read many Q and A to notice the dissappointment of those who attempt to buy a home with big bank funding. In the microcosim in which I exist, and the 27 closing completed in the past 12 months, 31% were left at the alter by the big banks. Fortuneately, there was a local plan be in place.

NOTE: There are many bank imposed reasons for denying the loan that do not include the creditworthness of the buyer. The FIAT appraisal is the most common tool employed by the big banks..

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
0 votes Thank Flag Link Fri Sep 27, 2013
Hi Brad

Under a reverse mortgage, the homeowner converts the equity he has built up over time into cash, in the form of either a lump sum, a monthly payment to the owner, or a line of credit. Unlike a traditional home loan, a reverse mortgage has no monthly payments -- no repayment is required until the owner sells the home or is no longer using it as a principal residence. Many homeowners like the flexibility and cash that come with reverse mortgages, but the loans do come with a price: notoriously high closing costs.……
0 votes Thank Flag Link Fri Sep 27, 2013
unfortunately pre-approved means absolutely nothing, you will always be pre-approved that just means your lender is opening the doors to due business with you, however he is not doing background investigation to know if you are going to be approved or not. Take it from someone who has been pre-approved and was denied an FHA loan the week before closing or should i say after I had spend the money on absolutely everything, inspection escrow etc. Very convenient I may add.
0 votes Thank Flag Link Mon Apr 9, 2012
What did you do? I"m going thru the same thing, underwriting had my file since Jan 7 and my closing is supposed to be in 13 days! NOW they are saying they are not "comfortable" with my credit history. WHAT?!?
Flag Sat Feb 1, 2014
Way to go Brad!! Congratulations and may you have years of happiness!

Patty Neri
Keller WIlliams Realty
0 votes Thank Flag Link Wed Apr 29, 2009
congratulations, I wish you well in your new home.
0 votes Thank Flag Link Wed Apr 29, 2009
I closed on the home today. Thanks to all of you for your input. It definitely helped ease my mind about the process.
0 votes Thank Flag Link Wed Apr 29, 2009
I spoke with my broker this afternoon, and she informed me that she gained my pre-approval using Desktop Underwriter, and she was waiting for the underwriter to get back to her with the final approval on the loan.

The home I currently own is under contract and is set to close on the 24th of this month. This contract was executed on the 2nd. I was originally going to rent a home for a year to avoid the stress of a buy/sell transaction, but my real estate agent found a nice home in one of my favorite neighborhoods at a very reasonable price. With the low loan rates, we decided to go for it. My house was on the market for 8 months, so I wasn't actively looking for a new home, or lender which is why everything is so rush rush. Obviously, I would like an answer on the home I plan to purchase very soon. Would it be in my best interest to reach out to another broker and see if I can get a deal done faster, or would that lessen my odds of getting approved? If so, how long would it take to get an answer?
0 votes Thank Flag Link Wed Apr 8, 2009
Great answer David!


If you made it through Desktop Underwriter, you should not have a problem. The only issue would be the information you provided or input by the loan processor was incorrect. If you got yourself a loan officer, you should be ok!

If I can help let me know

Ryan Brandenburger
Mortgage Loan Officer/Broker
0 votes Thank Flag Link Wed Apr 8, 2009
I have seen loans in underwriting from 2-15 bus. days, FHA Takes a while with a lot of lenders right now. If the loan passed the AUS you have a high chance.
0 votes Thank Flag Link Wed Apr 8, 2009
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