It can be devastating for a pre-approved buyer to have their mortgage denied at the last minute. There are a few main common reasons why loans are usually denied even after you have been pre-approved by your financial lender. Before Making any financial decision during your home loan processing, make sure you talk to your mortgage professional or real estate professional. This can prevent you from making a mistake that could change the outcome of whether or not your mortgage loan is approved.
Change of Jobs
One of the most common reasons a mortgage loan is denied is due to a change in employment. Most financial institutions have certain requirements for length and consistency of your employment. A change in employment maybe acceptable in some cases if it’s in a similar field, but it is reviewed on a case by case situation. It is very important that a buyer who is pre-approved asks his mortgage consultant about a possible employment change before making the change. In most cases, a professional mortgage consultant will be able to predict whether there will be an issue with ultimately obtaining the mortgage loan or not.
Negative Item or Additional Debt On Credit Report
While having a perfect credit is not a necessary “must-have” item to be approved by your home lender, there are specific credit score guidelines that each type of mortgage lender will require. Having a negative item showing up on your credit report, after being pre-approved can be a substantial reason for your loan to be denied. It’s extremely important that a buyer monitors his credit score after they are pre-approved and have a clear understanding of how credit scores changes can actually impact a home loan process. Maintaining a close watch on your credit score during the loan process is vital for a smooth and easy process between you and your home mortgage lender.
Another very common reason a mortgage loan is denied after being pre-approved is because a buyer takes on additional debt. Something called Debt-To-Income Ratio is one tool commonly used by all mortgage lenders, which helps them determine how much debt a buyer can afford to compare to his total income. Make sure you ask questions before you acquire any new debt that can severely impact your credit score and consequently the outcome of your home loan process.
Talk To Your Mortgage Specialist
If you have already embarked in the home loan process or are looking for a home mortgage loan, be sure to find a mortgage specialist that will help and educate you in every aspect of your home buying process. Be inquisitive and do not be afraid to ask, “How can I ensure my mortgage is not denied?” A professional mortgage specialist will be willing to help you with all this information, even if you have not yet made your final decision.
For any further questions, please contact us and let us assist you with any need you may have on the home buying process.
by Michael DeSantis, Broker / President. American Mortgage Resource