Good information for our Chantilly area friends and beyond:
Congratulations if you have been (or want to be) pre-approved for a home mortgage! That is a great first step, but it is not the same as a mortgage approval.
But why would a lender deny a mortgage after pre-approving a borrower? Here’s what you should know.
Sudden Changes In Income Or Employment History
A number of mortgages will require borrowers to have consistent employment for a certain length of time. If you apply for an FHA mortgage, for instance, you’ll be obligated to have an employment history dating back at least two years. Any gaps in your employment history will require a written explanation that your underwriter will need to approve.
If you switch career fields while in the process of buying a home and it has a significant impact on your income, your lender may deny your mortgage.
Credit Mismanagement After Pre-Approval
Lenders like to see consistency – so if your credit score suddenly drops after you’ve been pre-approved for a mortgage, it sends up a red flag. Even something as minor as a late payment on a cell phone bill could affect your credit score just enough to cause your lender to deny you. Pay extra attention to your bills throughout the home buying process, and make sure nothing slips past you.
Taking On More Debt In The Interim
A number of buyers will take on more debt after they’ve been pre-approved for a mortgage. Although it may be tempting to get a new car to go with your new house, getting a car loan will change your debt-to-income ratio and cause your lender to think twice about how responsible you are. If you’re in the process of buying a home, hold off on any other major purchases until after the deal has closed.
An Unsatisfactory Bank Appraisal
Sometimes, your mortgage can be denied for reasons that have nothing to do with you. Some lenders will only issue a mortgage if the property value of the house in question is appraised above a certain level. Others will deny a mortgage if the home requires roof repairs, electrical work, or a new heating system.
You’ll want to check with your lender to see what home conditions could be cause for denying your mortgage application.
Getting approved for a mortgage can be convoluted, but if you are working with a quality person and a good company, you should be getting advise to get through any obstacles. If you are looking for a good lender, we’ll be happy to give you names of a few people we have found to be reputable and good to work with.
And if you are starting your home search, do use our Search Tool to find and locate properties of interest all over Northern Virginia. Let us know if you have particular properties you’d like to actually tour. We’d love to hear from you!
