Once a lender pre approved you can the still deny you the loan before closing?

Question

I guess what Im asking is once a lender pre approves you for the loan does that guarantee you that loan?

Answer 1

Yes you can be pre-approved and down the line denied. You will probably be denied because of a program change or the requirements were changed.

They would have checked your income, bank reserves as well as ratios with what you had provided them, so that would not be an issue, unless you were so far off with additional information or documentation you had to submitted, that did not jive with previous documentation or information.

I hope this has been of some use to you,good luck.

"FIGHT ON"

Answer 2

Jenn's answer is dead on. Here are some typical scenarios where a pre-approval can turn into a decline:

The lender does not feel the income is steady, stable, and likely to continue. Generally, the lender wants to see a two year history of stable, steady income.

The borrower has done something to change the credit picture, such as purchasing furniture on credit or leasing a new car.

The source of down payment is questionable. The lender doesn't just care about the borrower showing up at closing with the necessary cash. The lender wants to be sure it is the borrower's money so that the borrower has skin in the game.

The property does not appraise at the needed value. I know, in the past several years, this rarely happened. But it's a new day and we will be seeing this more and more.

The lender could not get mortgage insurance for the loan. This, too, doesn't happen often, but it does happen. Usually the PMI company approves everything the lender approves, but if the borrower has had a previous action involving the insurer, there can be a problem.

Finally, one of the most common is that the borrower lied. If the lender catches a lie on the application, the deal is over. Who wants to lend money to a liar?

Answer 3

No you are not guranteed a loan if you are pre-approved. It's unfortunate and it doesn't make sense, but basically a pre-approval means that you fit the qualifications of the program. However, when you are going through the loan approval process you can be denied for a variety of reasons.

Usually when they pre-approve someone they haven't looked at your credit score, payment history and etc. Therefore if you meet the prerequisites and then do not meet the credit worthiness the program calls for - you can be denied.

I would speak with your lender and get it in writing as to why you were denied. Usually they send you letter telling you why but it's good to ask for it.

Answer 4

There are a pair of levels. there is Pre-Qualification that in the time of fact says you meet the minimum standards. Pre-Approval potential that the lender has pulled your credit checklist and asked to your earnings and different bills to make certain how plenty you may desire to get authorized for. although, they frequently do no longer do any verification of earnings. If something would not experience while they be advantageous this, or you had a important replace on your credit historic past they could nonetheless deny you approval. this could easily take place each and each of ways as much as you easily ultimate and receiving the examine.

Answer 5

That does not guarantee the loan. It is saying based on the info you provided you are approved. There are many factors that go to underwriting before your final approval. This is called the loan commitment. Once you have this the loan is secured.

Answer 6

Yes you can still be denied. When you've been pre-approved, it means based on the information they have you should qualify, but they have to double check that information. For example, if you say you make $4,000 a month on your loan application, but in turn really make $800, you'll be denied.