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In this era of Real Estate transactions you can pretty much guaranty that if you aren't sparkling with great credit, very little debt and a nice income you most likely will not get a home loan. 
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19 Comments on Preapproval Letter One Week and Credit Denial the Next...The Aftermath
Sally: I just had a conversation with a client who said she's waiting until she gets approved for her loan and then she's gonna buy some new furniture. Yikeeees! I had to tell her to wait until she closes as her credit could be pulled the day of closing and she could be denied cause of that impulse. Nothing is safe anymore.
Sally, I am so uncomfortable these days with many of the pre appovals I see. I do know that some of the lenders who give them out are not doing any of us any favors. Then I know others, when I see a pre approval I know it is probably going to fly.
The only thing to do is pick yourself up, dust yourself off and move on, you are so right!
"In this era of Real Estate transactions you can pretty much guaranty that if you aren't sparkling with great credit, very little debt and a nice income you most likely will not get a home loan."
"It's nice that "they" have laid down the law and made it clear that there are no funky home loans to be had...."
Shame, shame, shame!
Have we totally forgotten that the over whelming majority of those "funky" loans succeeded! Have we become a third world nation where only selected few deserve a house?
Are we to have to show our Party card to quilfie for a loan?
Does equal housing mean we're all to live in goverment housing?
Bill
Hi Sally, this is why I ask my buyers what info did the give the loan officer. I had one buyer who was preapproved for a high amount from Chase. All they asked for was his income and that was it. When I had him go back and they did it the right way, it painted a different picture. Good thing I did or else we would be in the same situation.
My first response is "what did they do or hide?" I have never seen this scenario but I have been forewarned by your circumstance!
Sally,
Sorry to hear about that. We are seeing about 5% of our market offering seller finance. I expect deals will continue to be created even without banks.
Best,
Steve
Sally - I'm sorry to be so blunt but that so called "pre-approval" letter you initially got was not a pre-approval letter. As others have stated, until the lender documents and verifies income (paystubs & tax returns), assets and credit, you do not have a "pre-approval".
This week, I met with two separate new clients to sign off on their pre-approval package (a whole boatload of documentation). After both meetings, my new clients commented on the process I had just put them through (one called me nit-picky and the other I won't repeat).
In my sweetest and most professional smile and voice, I informed them that was just the pre-approval process so they had best sit back, strap in and hold on tight if they ever expect to get to the closing table. As it so often does, that exact message is just what they needed to break the tension and get them laughing. I use that message all the time and it almost always works, except with the ones who have no sense of humor. Oddly enough, thoes are the ones that seem to have the hardest time coping during the home search and loan process.
These days, if you don't have a sense of humor, you won't make it to the closing table with your sanity. JMHO
Donna: For one...I represent the seller and yes, when we received the preapproval...the buyer turned in all his paperwork. ....However, the preapproval stated they would need 'updated' income/asset info to "update their credit package'. There were other things and after MUCH questioning (and after buyer already paid and went through home inspection) they did an "update" and now buyer is no longer preapproved. I can only go by what the buyer's agent and loan officer are telling me and in the end I'm glad I pushed because we were only a little over a week into the transaction.
Steve: I am confident there will be more buyers coming out....and one of those will be a 'real' one and get this listing to closing!
Gary: Obviously, they were hiding plenty but I knew something was up when I scoped out the 'preapproval'.
Gwynn: Absolutely right. I've had instances where I told them not to buy anything (cars, big items etc) because they would most certainly pull their credit again. They went out and bought not one...but two brand new cars.
Andrea: We've pretty much jumped up and are back on the market. Nothing left to do indeed! We have to be there for our sellers and though it's not a pleasant feeling....help get us full of motivation again!
Bill: It's one thing that "they" have laid down the law and not many who are clearly overextending themselves will be able to purchase homes...but the ones that really want to buy are unable. This is not helping our housing market....and clearly I can see both sides. On one side we don't want to make it worse...on the other it's getting worse anyway. What's left? Just keep moving on, right?
Sally,
Sometimes clients take good advice on their credit preparation and sometimes they don't. Glad you only lost a week before finding out.
Sally I would have to have a lot more information before I could make a comment on the right or wrong of this. Something just does not seem right, and credit denials can be for a whole host of reasons.
So sorry about that. The time between writting a contract and settlement are so scary, anything can happen. Its so hard to get a deal, have a buyer make a decision, get a contract accepted and then finally all fingers crossed make it thru settlement. Recently I had a buyer who was purchasing a home, they pulled credit at the end and someone had used his credit to purchase a car so now the deal has fallen apart and they have the police involved for stolen identity and credit repair will have to begin once they figure out all the damage that has been done. :((((
best wishes and I hope the next deal is drama free for you!
Sally,
Or there are so many things needed by the underwriter that the borrowers give up!
Ann Hayden in Wildwood, MO
Woo Hoo, We are living in strange times. Pre-approvals that mean little. But even qualified Buyers have been put through the wringer and who could blame them if they give up. There is a lot more to this story and it is not all nice and neat. I don't know when things will become normal , if ever again. Now we have to tell the Seller, even though I just hung up with the Lender and he says the Buyers are Golden, you accept this offer with the risk that it can still fail.
William...yes we are...it's so frustrating ya know? It sure would be nice to have our sellers not have to worry about the buyers really being qualified or if one week they're okay and the next not. It would also be nice for our buyers to be able to buy as well.
This is very scary. I am all over the lender to ensure that the buyer is solid in this market.
You were lucky- 1 week! Wow! It sure is a ordeal now a days. Have a great Memorial Day Weekend!
Jane....I wish everyone were like that....in this case I represent the seller..... I can only go by what I receive...and hear while speaking with the loan officer.
Lizette: VERY lucky. Some people drag it out for weeks .... BE HONEST to beging with...I feel sorry for the buyer who paid for home inspection already.
Sis - A social security number and name ain't a pre-approval, though I'm guessing some folks on the Mortgage Side of things still call it that. There's two ways (in my mind) to be a buyer of all things Mortgage, a prepared one or not. If you are a prepared buyer:
etc, etc, etc ... it sucks to say yes one day and "NO" the next. Personally, I'm like Marlon Brando's character from The Godfather ... I want Bad News straight up. Time is a precious thing to waste.
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