The primary reason to obtain pre-approval for a mortgage before shopping for a property is to ensure, you are looking at properties that are within the price range that you can afford.
Getting pre-approved for a mortgage doesn’t necessarily guarantee successfully obtaining finance- it is possible a mortgage can get denied, even after pre-approval.
Here are the top 5 reasons a mortgage application can be denied:
• Change of employment or a drastic change in income level
There are certain requirements for the length of consistent employment and often unexplained gaps in employment history, will require a written explanation.
A change of employment in similar fields is considered acceptable, unless of course there is a drastic change in the level of income.
There are instances where applications have been denied, based on the fact that the applicant has completely changed career fields.
• Negatives item on credit
It’s really important to know your credit score before you apply for pre-approval.
If you do get pre-approved, continue to pay your bills on time and keep monitoring your credit score
• Incurring additional debts
It’s important that once you have been approved, that you don’t acquire any additional debts or credit lines.
This could have a detrimental impact on debt to income ratios and can cause an application to be denied
• Loan requirements/Lender Guideline changes
It’s possible that a lender or mortgage product may experiences changes to requirements and guidelines after a pre-approval.
Also, changes to debt to income guidelines and savings required, could lead to a denial.
• Issues with a bank appraisal
There can be many reasons for issues with a bank appraisal, ranging from the appraiser citing repairs to "under-appraisals”, where the bank appraiser cannot substantiate that the value of the property is the same as the agreed sale price.
If you need to speak to a lending specialist or need an appraisal, contact propertyloans@realrenta.com and we will arrange for a representative from our trusted finance partner to contact you shortly.
Marlene Liontis
Tuesday, 4 December 2018
