Reply
Established Member
sihil
Posts: 15
Registered: ‎08-27-2012
0

Has anybody been denied a mortgage loan after being pre-approved?

Hi everyone. Has anyone been denied a mortgage loan after being pre-approved? If so, can you apply through another lender? I know someone who is in a situation that they signed a contract but may not have enough to cover closing costs if they get the final approval. They don't want to lose the house but are thinking about applying through another lender while waiting on a few documents to get approval.

Frequent Contributor
anca21bi
Posts: 356
Registered: ‎07-27-2008
0

Re: Has anybody been denied a mortgage loan after being pre-approved?

This happened to my aunt. After an accepted offer and inspection, she was denied the loan because her credit score went down. She even lost earnest money-and now the loan officer will not call her back.

Community Leader
Senior Contributor
StartingOver10
Posts: 4,583
Registered: ‎03-06-2010
0

Re: Has anybody been denied a mortgage loan after being pre-approved?

OP, are you saying that the buyer is under contract with a pre-approval but they don't have enough funds to actually close?

 

Any and all lenders will require the actual funds to be verified for the buyer to close. How much does the buyer need to close? Can the buyer go back to the seller to get a contribution toward buyer's closing costs? If so, it would need to be written into the contract with an addendum, signed by all the parties and submitted to the lender so the lender knows where the funds are coming from for closing. If the seller won't contribute, can the buyer get gift funds from a family member? If not, have the buyer/borrower speak to the loan officer to see if the lender willl bump up the rate a little bit and have the lender contribute to the buyer's closing costs.

 

^^I am assuming that the buyer has enough funds for the down payment out of their own funds and that they are just short on actual closing costs, not down payment funds.

 

I am a Realtor and I have seen it where the buyer has been pre-approved and not been able to close because the so-called pre-approval was issued by  a lender that didn't check all the documentation (tax returns, bank statements, paystubs etc) yet the LO wrote a letter saying they did check! This is very frustrating for all the parties involved in the sale of the property. It is best to get this straightened out right away, even if the deal needs to be cancelled. Don't wait until the last minute.

Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
0

Re: Has anybody been denied a mortgage loan after being pre-approved?

I was pre-approved and did not make it thru underwriting. tried 2 different banks and failed.

 

Ended up having to wait a bit and try again.

New Contributor
gotideas
Posts: 61
Registered: ‎05-22-2013
0

Re: Has anybody been denied a mortgage loan after being pre-approved?

Unfortunately yes,  found out the hard way that a preapproval can mean nothing! I was denied on closing day after getting not only a preapproval but a conditional approval and then a final approval and nothing change except the interest rate when up .25 %.  turns out some lenders just don't care whether or not they do their job and when it finally gets to underwriting they do care.  I learned not to take anything for granted.  oh and the added bonus is i lost 10k that i may never see again because the builder doesnt return deposits after a loan approval even if it isn't really an approval.  Makes me wish I was on the other side of the mortage equation. 

Frequent Contributor
Sunshine85
Posts: 367
Registered: ‎01-14-2012
0

Re: Has anybody been denied a mortgage loan after being pre-approved?


gotideas wrote:

Unfortunately yes,  found out the hard way that a preapproval can mean nothing! I was denied on closing day after getting not only a preapproval but a conditional approval and then a final approval and nothing change except the interest rate when up .25 %.  turns out some lenders just don't care whether or not they do their job and when it finally gets to underwriting they do care.  I learned not to take anything for granted.  oh and the added bonus is i lost 10k that i may never see again because the builder doesnt return deposits after a loan approval even if it isn't really an approval.  Makes me wish I was on the other side of the mortage equation. 


Unfortunately, this is the case with many lenders. Too many people involved in the process really don't care, and don't treat a borrower's mortgage transaction they way they would want their own purchase handled.

 

Have you escalated to higher ups with the builder and regulatory agencies? It might take some time and persistence, but I believe you can get your money back. 

Established Member
sihil
Posts: 15
Registered: ‎08-27-2012
0

Re: Has anybody been denied a mortgage loan after being pre-approved?

Yes, the buyer was planning on closing costs partially being covered with grants (denied for one, waiting on the other). He did get the seller to pay $5,000 towards closing costs leaving him to pay about $5,800 in closing. They do have enough to pay the downpayment costs but, he is contemplating going with a different lender that will cover the closing costs. His lender will not roll the closing costs into the mortgage loan itself.

Super Contributor
DallasLoanGuy
Posts: 6,352
Registered: ‎07-03-2007
0

Re: Has anybody been denied a mortgage loan after being pre-approved?


gotideas wrote:

Unfortunately yes,  found out the hard way that a preapproval can mean nothing! I was denied on closing day after getting not only a preapproval but a conditional approval and then a final approval and nothing change except the interest rate when up .25 %.  turns out some lenders just don't care whether or not they do their job and when it finally gets to underwriting they do care.  I learned not to take anything for granted.  oh and the added bonus is i lost 10k that i may never see again because the builder doesnt return deposits after a loan approval even if it isn't really an approval.  Makes me wish I was on the other side of the mortage equation. 


contact the CFPB and see if you can get any relief

 

* While I try to visit the forum often, please feel free to contact me directly with a link to your post if I fail to answer a follow up question.

* Lending across the entire 'Great State of Texas' since 2004
Established Contributor
jadeite788
Posts: 510
Registered: ‎09-25-2009
0

Re: Has anybody been denied a mortgage loan after being pre-approved?


StartingOver10 wrote:

OP, are you saying that the buyer is under contract with a pre-approval but they don't have enough funds to actually close?

 

Any and all lenders will require the actual funds to be verified for the buyer to close. How much does the buyer need to close? Can the buyer go back to the seller to get a contribution toward buyer's closing costs? If so, it would need to be written into the contract with an addendum, signed by all the parties and submitted to the lender so the lender knows where the funds are coming from for closing. If the seller won't contribute, can the buyer get gift funds from a family member? If not, have the buyer/borrower speak to the loan officer to see if the lender willl bump up the rate a little bit and have the lender contribute to the buyer's closing costs.

 

^^I am assuming that the buyer has enough funds for the down payment out of their own funds and that they are just short on actual closing costs, not down payment funds.

 

I am a Realtor and I have seen it where the buyer has been pre-approved and not been able to close because the so-called pre-approval was issued by  a lender that didn't check all the documentation (tax returns, bank statements, paystubs etc) yet the LO wrote a letter saying they did check! This is very frustrating for all the parties involved in the sale of the property. It is best to get this straightened out right away, even if the deal needs to be cancelled. Don't wait until the last minute.


+1. :smileyhappy: I would advise this to anyone get your agent to negotiate closing costs, it can save you.  3% is average, but the seller cannot contribute no more than 6% of closing costs.  If you been preapproved and you are already in contract, and you realize your funds is low, you can always go back and do an addendum to get the seller to pay closing costs.  More than likely they will help because they don't want to risk the chance of the house going back on the market, that means they risk it getting a lower offer than before or the house being on the market longer than expected.  My seller paid all of the closing costs, threw in a brand new A/C, home warranty, fixed minor foundation issues.


Starting Score: 565
Current Experian Score: 634 (Lender pull)
Current Equifax Score: previous 668, 680 as of 11/12/13 lender pull
Current Transunion Score: previous 675,677 as of 09/23/13
Goal Score: 750

Take the FICO Fitness Challenge



Super Contributor
DallasLoanGuy
Posts: 6,352
Registered: ‎07-03-2007
0

Re: Has anybody been denied a mortgage loan after being pre-approved?


jadeite788 wrote:

StartingOver10 wrote:

OP, are you saying that the buyer is under contract with a pre-approval but they don't have enough funds to actually close?

 

Any and all lenders will require the actual funds to be verified for the buyer to close. How much does the buyer need to close? Can the buyer go back to the seller to get a contribution toward buyer's closing costs? If so, it would need to be written into the contract with an addendum, signed by all the parties and submitted to the lender so the lender knows where the funds are coming from for closing. If the seller won't contribute, can the buyer get gift funds from a family member? If not, have the buyer/borrower speak to the loan officer to see if the lender willl bump up the rate a little bit and have the lender contribute to the buyer's closing costs.

 

^^I am assuming that the buyer has enough funds for the down payment out of their own funds and that they are just short on actual closing costs, not down payment funds.

 

I am a Realtor and I have seen it where the buyer has been pre-approved and not been able to close because the so-called pre-approval was issued by  a lender that didn't check all the documentation (tax returns, bank statements, paystubs etc) yet the LO wrote a letter saying they did check! This is very frustrating for all the parties involved in the sale of the property. It is best to get this straightened out right away, even if the deal needs to be cancelled. Don't wait until the last minute.


+1. :smileyhappy: I would advise this to anyone get your agent to negotiate closing costs, it can save you.  3% is average, but the seller cannot contribute no more than 6% of closing costs.  If you been preapproved and you are already in contract, and you realize your funds is low, you can always go back and do an addendum to get the seller to pay closing costs.  More than likely they will help because they don't want to risk the chance of the house going back on the market, that means they risk it getting a lower offer than before or the house being on the market longer than expected.  My seller paid all of the closing costs, threw in a brand new A/C, home warranty, fixed minor foundation issues.


 

actually, most loan officers are making 1% of the loan amount as income. i dont negotiate... everyone gets the SAME deal.  showing favoritism to one and not another will likely get someone in trouble with the cfpb

 

you should negotiate with the REALTOR to pay some fees or buy down your rate as they are the deep pockets in these transactions..... they still make close to 3% of the purchase price as income.

 

 

* While I try to visit the forum often, please feel free to contact me directly with a link to your post if I fail to answer a follow up question.

* Lending across the entire 'Great State of Texas' since 2004

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}