topic Re: Rejection after Pre-Approval in Mortgage Loans

Rejection after Pre-Approval

Anonymous — Mon, 06 Jun 2016 19:48:05 GMT

Has anyone ever had this happen? I just got approved for a $210,000 FHA mortgage. Agreed on a house for $195,000, but very curious on the challenges of finishing the process. About 5 years or so ago I got a little behind on my student loans. I recovered and haven't missed a payment, or been late on anything since then. I have paid off 2 credit cards in the past 1.5 if that matters at all?

Re: Rejection after Pre-Approval

StartingOver10 — Mon, 06 Jun 2016 21:27:40 GMT

@Anonymous wrote:
Has anyone ever had this happen? I just got approved for a $210,000 FHA mortgage. Agreed on a house for $195,000, but very curious on the challenges of finishing the process. About 5 years or so ago I got a little behind on my student loans. I recovered and haven't missed a payment, or been late on anything since then. I have paid off 2 credit cards in the past 1.5 if that matters at all?

Where I have see a rejection after a pre-approval is in two circumstances:

1) If the buyer did not supply their documentation to the LO upfront and the LO provided a "pre-approval" based on verbal information from the buyer that was not confirmed by the written documentation supplied at a later date

2) Or, there was a change in circumstance by the buyer such as losing a job, or adding debt during the process.

Wells Fargo, Chase and BOA are notorius (especially WF) for #1 happening.

But if you are going to a good lender and you have supplied all of your documentation upfront before you received the pre-approval and you have no changes in your circumstances, then really everything should be okay.

Re: Rejection after Pre-Approval

DallasLoanGuy — Tue, 07 Jun 2016 02:20:16 GMT

pre-approval is only as good as the loan officer issuing it

Re: Rejection after Pre-Approval

JediNeo — Tue, 07 Jun 2016 02:38:13 GMT

Did your pre approval go through the underwriting process? Or is it based on verbals? If you've gone through UW yup should be good. Then your next biggest hurdle is locating a property that will pass an FHA inspection.

Re: Rejection after Pre-Approval

Anonymous — Tue, 07 Jun 2016 13:08:41 GMT

All I got was a letter stating (and him telling us) we were pre-approved for a $210k loan from the mortgage broker. I know he looked at our credit reports and checked our credit scores. He hasn't seen any of the other documents usually needed by them. My wife and I, both have good jobs, enough money for the down payment/closing costs, with some left over, retirement. Card balances are kind of high, but we have just paid off a few in the past year and a half, and have it set up to pay off the rest within the next few years. It was just that little hicup.

I personally think I might be overreacting and might just have to write a letter to state why it happened. Thanks for all the replies guys, it is greatly appreciated.

Re: Rejection after Pre-Approval

StartingOver10 — Tue, 07 Jun 2016 13:45:12 GMT

@Anonymous wrote:
All I got was a letter stating (and him telling us) we were pre-approved for a $210k loan from the mortgage broker. I know he looked at our credit reports and checked our credit scores. He hasn't seen any of the other documents usually needed by them. My wife and I, both have good jobs, enough money for the down payment/closing costs, with some left over, retirement. Card balances are kind of high, but we have just paid off a few in the past year and a half, and have it set up to pay off the rest within the next few years. It was just that little hicup.

I personally think I might be overreacting and might just have to write a letter to state why it happened. Thanks for all the replies guys, it is greatly appreciated.

To me this is a red flag. It shows your lender/LO is not pro-active. Why would s/he issue a pre-approval without seeing your docs?

Not a good start IMO. Get a LO that cares. One that puts your file together the right way from the beginning.

Re: Rejection after Pre-Approval

Anonymous — Tue, 07 Jun 2016 14:04:49 GMT

I'm just assuming the documents he'd need to see would be: credit report (he already pulled), bank statements, work history, tax returns, stock documents, retirement/401k stuff, debt to income ratio. I know when we talked to him we pulled everything from that stuff that he'd see and didn't stretch the truth, or lie at all. The lender got recommended by one of my wife's friends.

Re: Rejection after Pre-Approval

ezdriver — Tue, 07 Jun 2016 14:57:39 GMT

@Anonymous wrote:
All I got was a letter stating (and him telling us) we were pre-approved for a $210k loan from the mortgage broker. I know he looked at our credit reports and checked our credit scores. He hasn't seen any of the other documents usually needed by them. My wife and I, both have good jobs, enough money for the down payment/closing costs, with some left over, retirement. Card balances are kind of high, but we have just paid off a few in the past year and a half, and have it set up to pay off the rest within the next few years. It was just that little hicup.

I personally think I might be overreacting and might just have to write a letter to state why it happened. Thanks for all the replies guys, it is greatly appreciated.

That is a problem right there because a mortgage broker cannot legally issue any preapproval. At a minimum, that broker should have stated which lender issued your preapproval. I am surprised that a seller/seller's agent would accept such a preapproval with an offer. Try a mortgag banker or credit usning in your area.

Re: Rejection after Pre-Approval

DallasLoanGuy — Tue, 07 Jun 2016 17:06:14 GMT

they should have at least looked at pay stubs and taxes.

but if nothing is weird(side buiness or other losses on tax returns) then you are likely ok.

or will know shortly.

Re: Rejection after Pre-Approval

djshifted — Tue, 07 Jun 2016 18:55:35 GMT

I think it depends. I just went through the PriorityBuyer preapproval through Wells Fargo, and the system automatically decisioned on preapproval based on the mortgage amount, down payment (5%), and type (conventional) before I had submitted the documentation requested (Tax Transcript request form, W-2's, pay stubs, bank statements, LOX, etc.) and provided me with the PriorityBuyer letter. The necessary documents were requested in my portal with a 4 day deadline (which I had submitted within an hour). So I officially have a preapproval, but there could be a rejection based on items in my LOX's (delinquencies and inquiries) or something else.

Re: Rejection after Pre-Approval

Anonymous — Fri, 08 Jul 2016 17:29:42 GMT

Were you approved for your mortgage and able to close.Just FYI I got my pre approval with information I stated in my application,info my LO asked about via email and a credit pull and my actual approval went through with flying colors and was easy and as smooth as could be.

Re: Rejection after Pre-Approval

Anonymous — Fri, 08 Jul 2016 17:43:36 GMT

Yes, I actually closed yesterday. Everything went smooth. They actually didn't need too much during my underwritting, but that could be because my wife gave them anything and everything....

Re: Rejection after Pre-Approval

Anonymous — Fri, 08 Jul 2016 18:04:59 GMT

That's awesome,congratulations.Its a great feeling!

Re: Rejection after Pre-Approval

DallasLoanGuy — Fri, 08 Jul 2016 19:39:55 GMT

congrats