5 Reasons your Mortgage can Fall Through
Until you sign the closing papers, your mortgage is not a “sure thing.” Anything can happen until then, which is why it’s critical to maintain your current financial and employment situation. If you’re considering buying a home or are already in the process, here are five things that could cause you to lose your loan approval.
Job Transition
Lenders will approve you for a mortgage based on your employment and income. They assume your job will remain the same, which we all know isn’t always the case.
While changing jobs after your loan closes isn’t a big deal, changing jobs in the middle of the loan process could cause a delay in processing or even cause you to lose your loan approval.
Hurting your Credit Score
When you apply for a mortgage, lenders pull your credit, and then again before you close. If your credit score falls dramatically (for the worse) during that time, you may lose your loan approval. Once pre-approved, try to maintain your credit by not opening new accounts, missing payments, or accruing excessive credit card debt.
Making Large Purchases
Hold off on any large purchases until after you have applied for (and been approved for) a loan. Making large purchases, particularly on credit, can result in the loss of your loan approval.
This is why.
You either opened a new credit account or increased the debt on an existing account if you purchased on credit. This can lower your credit score and raise your debt-to-income ratio, lowering your chances of approval.
Making Large Deposits or Withdrawals in your Bank Account
Lenders are wary of large deposits or withdrawals from your bank account. A large withdrawal indicates that you spent money and may now owe more money or have less money to put down on a home than you were approved for.
Large deposits could indicate that you borrowed money or took out a loan. A new loan (even if it comes from family or friends) is a debt that affects your debt-to-income ratio. As a result, increasing your DTI may result in the loss of your loan approval.
Failure to provide requested documentation
Even if you’ve been pre-approved for a mortgage, underwriters will always require additional information. If they request documentation that you cannot or will not provide, they will be unable to clear your loan conditions. This may cause them to reject your loan.
Last Thoughts
Mortgage approval is not final until the loan is closed. Meanwhile, it’s critical to keep your data as stable as possible. If at all possible, keep your credit score the same, your bank account the same, and your job or income the same.
You have a better chance of qualifying for and closing your loan if everything remains the same. Contact me today if you have any questions about how your loan may be affected or if you are ready to look at homes.
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