Why would a bank pre-approve a buyer to only deny the loan close to the closing process. It really a waist of the buyers time and money. Also the

Asked by Kenya Bolden, New Cassel, Westbury, NY Thu Sep 9, 2010

bank did not even offer a solution to let the buyer know how to get qualifed. There are banks with very poor practices and it's upsetting and very stressful for the buyer.

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18
Jeanne Feeni…, Agent, Basking Ridge, NJ
Thu Sep 9, 2010
Hi Kenya - there is much work to be done post pre-approval - as Gail as mentioned, details must be confirmed. And the cautionary words of the first poster are well taken. Once you have applyed for a loan, NO big purchases or movements of money. The lender will recheck details close to closing and any changes will cause likely delays and may derail the transaction altogether.

Also remember there are two parties that must perform - the borrower - and the property (appraisal weighs in here). If either fails, you may have trouble.

You should be able to get an explanation from the bank though so you understand what was the cause. Ask again so that you can begin to remedy the situation.

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:  http://www.feenick.com
1 vote
Gail Gladsto…, Agent, 11743, NY
Thu Sep 9, 2010
In my opinion, the word "preapproval" is too loosely used.

Pre-Qual: You can call almost any lending body and get a pre-qual by giving information on the phone.

Most pre-approvals are given without verifying salaries, Income tax returns, etc.

If I am working with a buyer, I won't waste my time or the sellers' time...I only work with buyers who have attained a Lender Pre-Commitment....contingent ONLY upon appraisal and contract. Now that's a terrific buyer! And minimizes the stress and disappointment to all involved.
Web Reference:  http://GailGladstone.com
1 vote
x, ,
Mon Sep 13, 2010
A Pre-approval is different from Pre-qualification. And these get mixed up in the real estate process sometimes.

Pre-qualification is a ten minute conversation with mortgage banker/broker where a one page letter is generated that buyer should be good to go for the mortgage they requested. From my experience, if it's a good mortgage banker/broker and they are 50/50 on whether the buyer is strong enough, they advise the buyer to go through full Pre-approval.

Pre-approval = basically this is a buyer obtaining a mortgage absent the address to the property they are going to buy. It is very powerful for leverage in this market. It is pretty iron clad that the buyer will be able to close. It can take 2 weeks to go through (and don't spend any large amounts of money int he interim that can kill you) as opposed to the pre-qualification that takes 24-48 hours.
0 votes
Ian A. Wolf, Agent, Morristown, NJ
Fri Sep 10, 2010
Too little info to really supply an appropriate explanation, but clearly you were not properly approved in the first place. Also, it is important to know what kind of lender it was. Of the three: Bank, Broker, Mortgage Banker(correspondence lender) you could get varying approvals and possibilities depending on who was used. You need to determine which one your lender is. I do have a lender that I use in situations like your, in fact we closed one recently where the story was almost identical. This lender can even hold the paper so, it does not need to be sold on the secondary market. If you contact me, I can find out some more detail in dialogue and determine if he would be a good fit for you. Just looking to help.
0 votes
Kenya Bolden, Home Buyer, New Cassel, Westbury, NY
Fri Sep 10, 2010
I just feel if credit scores are an issue for the bank. If debt to ratio is an issue for the bank. There should not be a pre-approval. If those are issues in the very beginning banks should not give buyers the hopes of selling the dream to
be in a home again it's a waist of the
buyers time and money and you have to fight to get your money back. So I will
stand by the thought of the loan processor as being inexperienced because now they are juggling with a person life and hard working money.
0 votes
FSBOsuccess, Home Seller, 28590
Fri Sep 10, 2010
A bank will not give you information on how to get qualified. One person may tell you your DTI is "workable," but it ultimately comes down to the underwriter. There has to be other reasons (which could include your DTI) as to why you were not approved. I know it is frustrating, but don't just put down the processors as "inexperienced loan processors" because you were denied. Credit scores are a big factor too.
0 votes
Susan Philli…, Agent, New York, NY
Fri Sep 10, 2010
Kenya - Congratulations if the bank has preapproved you. This approval provides the seller with reassurance that you are credit worthy. However, the final approval is based on more than this. The bank must determine whether or not the property will appraise for the price you are paying and that the property's financials are in order. This due diligence protects you as well as the bank.
0 votes
Kenya Bolden, Home Buyer, New Cassel, Westbury, NY
Thu Sep 9, 2010
The issue with the 1st bank was FHA's rule on flipping. A seller is suppose to wait 90 days before putting a house on the market which the seller did not wait which caused the bank to deny the loan and the debt ratio it wasn't explained in the declination letter. I had to reach out to the company to find out why the loan was denied two weeks before closing. They still did not offer any solutions or suggestions inorder to get a loan commitment.
did not explain anything.
0 votes
Kenya Bolden, Home Buyer, New Cassel, Westbury, NY
Thu Sep 9, 2010
By the way I am still waiting to purchase this home through the second bank and still waiting on a response. This has to be one of the most stressful experiences that someone could go through. I really don't understand why it takes so long. I have been waiting on the 2nd bank since the end of July. I feel like I am backed into a corner and there is no way out. There has to be a better way. The banks should not have a buyer wait this long for a loan commitment. I feel my life is put on hold and it's very stressful. What can I do?
0 votes
Tammy Benkwi…, Agent, Somers, NY
Thu Sep 9, 2010
Kenya:

I just read your last response. Did you ask your mortgage broker specifically why they would not approve the loan? They must have given you a reason. It would help us in answering rather than guessing all the possibilities - and these days there are many.
0 votes
Kenya Bolden, Home Buyer, New Cassel, Westbury, NY
Thu Sep 9, 2010
I would like to Thank all on the responses. To answer the questions there was no large purchases close to closing. My debt to ratio is high but I was told was workable. There were some issues with the seller because he did flip the house and FHA has rules and guidelines on flipping. That issue was resolved by the time the closing date becauses we were back in forth for three months. They just did not offer any solutions and just very were inexperienced loan processors
0 votes
Kim Vitale, Agent, Blue Point, NY
Thu Sep 9, 2010
If you have an agent, they should have been in contact with the lender through the whole contracting process. If you do not have one, you have the right to question why and the right to be informed why. A common reason would be that your debt to income ratio had changed. Did you make any recent large purchases, such as a car, purchases on a credit card, etc? Consult with the lender at length about your situation, and ask which factors can be improved to gain approval. Often, loan officers will be more than happy to talk with you and to point you in the right direction for future approval
0 votes
Desari Jabbar, Agent, Stone Mountain, GA
Thu Sep 9, 2010
A pre-approval is just that. A pre-approval. There are lots of stipulations that have to be satisfied before a loan can close. I agree that some loan officers, and realtors for that matter, can be insensitive. But, you should have been given a formal declination letter. If you didn't, then request one from the loan officer. Once you have that information, you can see what your credit issues are address them. And try again. Don't give up!

Best of luck to you!!
Web Reference:  http://www.DesariJabbar.com
0 votes
Jenet Levy, Agent, New York, NY
Thu Sep 9, 2010
Kenya,
I'm not sure if you are talking about yourself or a friend. Yes, it certainly is very disappointing to have a pre-approval (which is more than a pre-qualification) and then not be able to close. Was the buyer working with an agent? A good buyer's agent would have strong ties to lenders and be in touch with them throughout the process. It's hard to say what went wrong here without knowing the details, but something must have changed. EIther the buyer's credit score dropped, their employment status changed, or the property did not appraise well. If it is a unit in a larger development, the financials of the development could have come into play too. They buyer's agent should definitely be getting an explanation from the lender so the deal can be saved. If the buyer did not have an agent (never a good thing to be unrepresented) they still have a right to inquire and get some answers to see if anything can be rectified.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Thu Sep 9, 2010
Were you given a pre-qualification one wonders, and not a pre-approval, the two documents are different--on the other hand did anything happen to change your status, such a new negative on credit, any large purchases, etc.--what is your loan officer suggesting.
0 votes
Adebayo Fagb…, , New York, NY
Thu Sep 9, 2010
Kenya,

Lending practices has changed tremendously prior to what they use to be in the past. Most savvy brokers of today, inform their clients of those things that they should refrain from whille they are in the process of buying a home( as explained by Kenya Bolden) if you engage in any credit transation that involves you purchasing a substantial merchandise, your debt to ratio would change so also would your credit score. In a nut shell during this period you dont buy anything on credit

Learn more from http://www.northshoreadvisory.com/

Good luck with your home purchase.
0 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Thu Sep 9, 2010
Hi Kenya - there is much work to be done post pre-approval - as Gail as mentioned, details must be confirmed. And the cautionary words of the first poster are well taken. Once you have applyed for a loan, NO big purchases or movements of money. The lender will recheck details close to closing and any changes will cause likely delays and may derail the transaction altogether.

Also remember there are two parties that must perform - the borrower - and the property (appraisal weighs in here). If either fails, you may have trouble.

You should be able to get an explanation from the bank though so you understand what was the cause. Ask again so that you can begin to remedy the situation.

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:  http://www.feenick.com
0 votes
jo, , Hollywood Hills, Los Angeles, CA
Thu Sep 9, 2010
If the buyer goes and gets credit cards to put new furniture in the new house...If the buyer goes and buys a new car to put in the driveway of the new house...or anything else that had to do with credit during the process, could have caused the lender to reject the loan. There had to be a reason. Go back and check the credit info...I always tell buyers, "when you are in the process of buying a home, DO NOT BUY ANYTHING OR APPLY FOR ANYTHING..." just for reasons like you just stated.
0 votes
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