How To Make Sure Your Pre-Approval Gets Rejected

How To Make Sure Your Pre-Approval Gets Rejected
 The Fairfield Team 6/28/2017 6:00 AM

Are you looking to get pre-approved for a home and wondering if it will get rejected? If you’ve done any of the things listed below, you are on your way to getting denied.

Here are ways to make sure your pre-approval gets rejected:

  1. Have lots and lots of debt
    If your debt to income ratio is scary, then you are not going to get pre-approved. If you want to keep your debt low while you are trying to buy a home, maxing out all of your credit cards is not the best idea.
     
  2. Drastically change your income/employment situation
    When getting pre-approved for a home, lenders look at your income, but that doesn’t mean they stop looking. If you say you work full time, you must be able to prove that you work full time and might even be asked to show pay stubs. Another issue is change in employment and this usually occurs with maternity leave. If you take maternity leave before you are approved, you might need to wait until both you and your spouse are earning income to qualify.
     
  3. Don’t provide the lender with a single sufficient document
    To secure financing, you need to provide documents such as W-2 forms, bank statements, tax returns, recent pay stubs and divorce decrees. Not providing your lender with sufficient documents can guarantee that you will not be approved. Lenders might not ask for all of these documents upfront but they will ask for them eventually.
     
  4. Make sure your credit is low
    Your credit score can changes in situations like taking on additional debt or not paying your debt on time. If you are missing payments on your credit card, this will also ensure that your credit score is going down. If it’s low enough, you will not be pre-approved. If it dips after your pre-approval, chances are your final loan approval will be denied.
     
  5. Pick the wrong property
    There are some properties out there that lenders are iffy about financing. These properties include places like second homes or investment properties. This doesn’t mean there isn’t funding available for these properties, it just means they come with more stringent terms like bigger down payments.
     
  6. Pick an inexperienced mortgage broker
    We aren't saying you have to pick the best of the best when it comes to mortgage brokers and lenders, but do your research. Someone that is experienced should be able to quickly tell you your debt to income ratio and what is best for you and your financial situation.
     
  7. Spend the money you have set aside for closing
    You have worked hard to set aside the money you are going to use to close your house and it’s just sitting in the bank asking for you to spend it...do not do it.  
     
  8. Co-sign loans for your family and friends
    If you cosign a loan for a family member or a friend and they do not pay their debt on time, that is a hit on you and your credit and even worse you might have to pay it if the borrower doesn’t.
     
  9. Buy a brand new car
    If you are trying to get pre-approved for a mortgage, do not go and make big purchases like a car for instance. You are trying to show a mortgage broker that you can handle your finances, not that you are a big spender.

In search of your first home or a new home? Contact us and we would love to help you find your dream home!