General Question

livelaughlove21's avatar

How often does a pre-approved mortgage loan not happen?

Asked by livelaughlove21 (15724points) July 20th, 2012

I posted some about this on a previous day, so some of you may have already heard it.

My husband Josh and I are in the process of buying our own home. His uncle is a mortgage lender and pre-approved Josh for a $140,000 loan with 100% financing. We don’t have much money right now (we just got married), so he is either waiving or incorporating the closing costs into our loan. He’s helping us out a whole lot and introduced us to a great realtor that helped us find the perfect house.

It’s brand new, has a great warranty, and was listed at $139,900. We met with the building company last night, made an offer, and it was accepted today. Our closing date is set for 60 days from now, but our lender said he’d get it done in 45. We’ve decided to live with my parents in the meantime to save up as much money as we can.

The sold sign is up and all the initial paperwork is done. I’m under the impression the longest part is the loan approval. We’re gathering up my husband’s tax returns, W-2’s, bank statements, etc. How often do things get far along and then the loan falls through? We’ve got connections I suppose, but I’m so paranoid it’ll all fall through somehow.

Any experience/advice would be awesome. We’ve never owned anything but a car, so we’re both excited and nervous about the next two months.

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6 Answers

SuperMouse's avatar

As long as the documentation you provide matches the information you provided to obtain the pre-approval the loan should go through fairly easily. Your best bet to keep things moving and ensure a smooth and quick closing is to provide everything requested as completely and quickly as possible. Problems arise when the documentation you provide doesn’t confirm what you disclosed to the mortgage broker for the purposes of pre-approval. If the house is appraised for the purchase price and all of your documentation is in line, it should go right through! Good luck and congratulations!

creative1's avatar

First off let me congratulate you!!

Just follow everything they tell you to do at the mortgage company, do not open any new credit products or have your social security numbers used on anything that requires a credit check in order to do (such as new cell phone). Don’t change or loose any jobs or anything during the process. They will want proof of your bank accounts and money in them, also proof that your rent was paid on time. It seems like they want every little piece of personal info but just give them what they ask for. They will also do an appraisal for the property to make sure they are not loaning you more than the property is worth.

Now since you don’t have a down payment to put on the property will you have to pay PMI on the loan?? This is something to consider since it will make your payments higher.

I know when I was going through this all last year I was so scared that it wouldn’t go through for some crazy reason. Now I did have to go to a different mortgage company that waived the condo docs since I was approved but the condo association was not approved by the first mortgage company I was pre approved for. This was something that the mortgage company didn’t tell me until I was just about to close then I had to push the close date back in order to scramble to get a new mortgage company.

Its well worth all the work involved getting the loan when you put your key in the door for the first time and open the door to your new home.

CWOTUS's avatar

The pre-approval is based on the statements you had made (or public information available about you) to the lender in some kind of prequalification process.

Now the approval process needs verification of those statements: proof of income and earnings, primarily, but also other facts in your credit report (which the lender probably did not pull prior to the formal application). As long as your overall debt isn’t already too high, you keep your job/s (and/or any other income streams on which you’ll depend to make the payments), and the proofs you provide support the earlier statements, and no other adverse information comes up, such as undisclosed judgments against you or your spouse, for example, then I don’t think you have much to worry about.

Good luck with the new house!

YARNLADY's avatar

As @CWOTUS the lender needs to verify that the information given for the pre-approval is correct, and they also have to find a loan that matches your needs. The pre-approval was not necessarily based on a loan/funds being available, but rather on your ability to qualify for such a loan.

Garebo's avatar

they see something they don’t like they pull the plug as fast as blowing into a Kleen-ex.
My only advice which is what worked for me is find the right person in the loan dept. You got Josh’s uncle, I would relax, I am sure he will make it happen. Unless there is something you are not revealing or don’t know about, then it could get messy even for Josh’s uncle.
My hunch, you will be in a new house by winter.

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