Can you be denied after pre-qualification?

LovelyDianna · ‎07-10-2017

Hello all, I applied for a pre approval from Bank of America and was approved. 4.25% for $250k. I was shocked because I really didn't think I would get approved. (Was denied 6 years ago for a pre approval from chase).

I decided to move forward and begin the house hunting procsss but now I am wondering, can I be denied later even though I was approved for a pre approval?

Should I shop around? I'm thinking I want to try somewhere like Sebonic or K2 lending who I heard has lower rates. I was told I have 30 days to get my credit ran as many times by mortgage lenders without impact to my credit.

Thanks in advance!!!

Experian:681
Transunion:682
Equifax: 682

Anonymous · ‎07-10-2017

Absolutely! You can be denied up until you get the keys.

LovelyDianna · ‎07-10-2017

Wow!! Didn't know that! What's the best way to make sure I don't waste my time? My lease is up in September and would hate for things to fall through around that time frame...

Experian:681
Transunion:682
Equifax: 682

Anonymous · ‎07-10-2017

You have 2 terms here that don't mean the same thing - pre qualification and pre approval. PreAPPROVAL means they have collected and gone through all your documents, prequalification means they ran the debts and income you gave them and gave you a best guess qualification. Do all the paperwork upfront. It will give you a stronger position then don't change anything regarding credit, income and debts. Maintain status quo until you close. YMMV.

Anonymous · ‎07-10-2017

What they said

Once I picked my lender (after being pre qual'd over the phone), then I went through the process of full on approval. It took a couple of weeks to go through processing and underwriting but then I knew I was good to go for real. Once you start the process, DO NOT INCREASE spending on cards, DO NOT apply for new credit, DO NOT change jobs (unless you HAVE to).. etc.

Once you close and get the keys only then are you solid. People get unapproved at the last minute all the time because they go out and quit their job, buy a new car...apply for credit for a house full of furniture....

LovelyDianna · ‎07-10-2017

@Anonymous wrote:
You have 2 terms here that don't mean the same thing - pre qualification and pre approval. PreAPPROVAL means they have collected and gone through all your documents, prequalification means they ran the debts and income you gave them and gave you a best guess qualification. Do all the paperwork upfront. It will give you a stronger position then don't change anything regarding credit, income and debts. Maintain status quo until you close. YMMV.

Sorry for the confusion in terms.

So what I have is a pre-qualification. I'm not locked in though. Is it best to try to get locked in now? Can I get locked in without actually having a home?

Experian:681
Transunion:682
Equifax: 682

LovelyDianna · ‎07-10-2017

@Anonymous wrote:
What they said

Once I picked my lender (after being pre qual'd over the phone), then I went through the process of full on approval. It took a couple of weeks to go through processing and underwriting but then I knew I was good to go for real. Once you start the process, DO NOT INCREASE spending on cards, DO NOT apply for new credit, DO NOT change jobs (unless you HAVE to).. etc.

Once you close and get the keys only then are you solid. People get unapproved at the last minute all the time because they go out and quit their job, buy a new car...apply for credit for a house full of furniture....

Thank you! I took all of my credit cards out of my purse. I guess I'll shop around for a few lenders.

Experian:681
Transunion:682
Equifax: 682

Anonymous · ‎07-10-2017

You cannot lock in until you have a property but you can submit all of your documentation such as pay stubs, tax documents, debt information and get the more solid preapproval. It will give you a more realistic max.

It is like a preapproved letter from a credit card company versus submitting the actual application and being approved. One is wishy washy and one is credit pretty much granted subject to finding a home.

StartingOver10 · ‎07-11-2017

@LovelyDianna wrote:
Hello all, I applied for a pre approval from Bank of America and was approved. 4.25% for $250k. I was shocked because I really didn't think I would get approved. (Was denied 6 years ago for a pre approval from chase).

I decided to move forward and begin the house hunting procsss but now I am wondering, can I be denied later even though I was approved for a pre approval?

Should I shop around? I'm thinking I want to try somewhere like Sebonic or K2 lending who I heard has lower rates. I was told I have 30 days to get my credit ran as many times by mortgage lenders without impact to my credit.

Thanks in advance!!!

Drop BOA like a hot potato. They have a reputation, along with the other big box banks, of issuing pre-qualifications and then failing to follow through with the closing. You do not want to be a week or two before the scheduled closing and receive a denial. Especially if it is for some overlay the bank has that no one else has - it happens all the time. Big box banks have tighter ratios too. Plus the "LO"s on the front end are hit or miss. Once in a while you will get someone good - but this is very rare IME.

It isn't generally the buyer/borrower. It is the process many of the big box banks use today and since the mortgage meltdown.

Go to a reputable lender that only originates, underwrites and funds mortgages. Not credit cards. Not bank accounts or car loans, Just mortgages. Some people call these non-bank lenders. Make sure you are working with a good LO that knows their own guidelines (not as easy as you would think).

Once you get a pre-approval with one of ^^these type lenders, you are good to go shopping.

You can not lock in your interest rate until you have a contract executed by both you, the buyer, and the seller.

Make sure you have all of your documentation submitted to the LO to get the pre-approval.

Anonymous · ‎07-11-2017

@StartingOver10 wrote:
@LovelyDianna wrote:
Hello all, I applied for a pre approval from Bank of America and was approved. 4.25% for $250k. I was shocked because I really didn't think I would get approved. (Was denied 6 years ago for a pre approval from chase).

I decided to move forward and begin the house hunting procsss but now I am wondering, can I be denied later even though I was approved for a pre approval?

Should I shop around? I'm thinking I want to try somewhere like Sebonic or K2 lending who I heard has lower rates. I was told I have 30 days to get my credit ran as many times by mortgage lenders without impact to my credit.

Thanks in advance!!!
Drop BOA like a hot potato. They have a reputation, along with the other big box banks, of issuing pre-qualifications and then failing to follow through with the closing. You do not want to be a week or two before the scheduled closing and receive a denial. Especially if it is for some overlay the bank has that no one else has - it happens all the time. Big box banks have tighter ratios too. Plus the "LO"s on the front end are hit or miss. Once in a while you will get someone good - but this is very rare IME.

It isn't generally the buyer/borrower. It is the process many of the big box banks use today and since the mortgage meltdown.

Go to a reputable lender that only originates, underwrites and funds mortgages. Not credit cards. Not bank accounts or car loans, Just mortgages. Some people call these non-bank lenders. Make sure you are working with a good LO that knows their own guidelines (not as easy as you would think).
Once you get a pre-approval with one of ^^these type lenders, you are good to go shopping.

You can not lock in your interest rate until you have a contract executed by both you, the buyer, and the seller.

Make sure you have all of your documentation submitted to the LO to get the pre-approval.

Yes!!! While I am a tried and true long time lover of all things BofA, even I didnt go that route. Went with straight up mortgage company. And I hit the lotto with the peeps I worked with; they were THE BEST! BEST! BEST!