How To Avoid Getting Mortgage Approval Can Be Revoked?

How To Avoid Getting Mortgage Approval Can Be Revoked?

This BLOG On How To Avoid Getting Mortgage Approval Can Be Revoked Was UPDATED On February 9th, 2018

Getting a conditional mortgage loan approval means that borrowers meet the basic qualifications with regards to income, credit, and assets.

  • Prior to approval, a mortgage loan underwriter has reviewed the following:
    • Income
    • Credit
    • Credit report
    • Credit history
    • Credit scores
    • Types of derogatory credit of borrower
  • The underwriter has reviewed the following:
    • Tax returns
    • Bank statements
    • W-2s
    • Letters of explanations with prior derogatory credit issues
  • Just because mortgage applicant got a mortgage approval does not mean they should take conditional mortgage approval for granted
  • A mortgage approval can be revoked at anytime until the closing of mortgage loan
  • There are times where a clients gets a mortgage approval but the mortgage approval can be revoked due to many reasons
  • Any changes of the initial conditions presented to the underwriter can be cause of mortgage approval to be denied
  • There are certain things to abide by and stay clear of during mortgage approval process
  • Remember that mortgage approval can be revoked
  • Ihappens to the best of us

Reasons Mortgage Approval Can Be Revoked

Most mortgage loans close in 30 days or less.

  • However, certain mortgage loans can take two or more months, not because of mortgage lender
  • But because of the circumstances such as the following:
    • Purchasing a short sale
    • Buying a foreclosure
    • New construction where it is beyond control and the control of the seller’s  and/or builders side
  • During the mortgage application/approval process, borrowers need to make sure that financial and personal profile does not change
  • A mortgage approval can be revoked at anytime if there are changes to personal, credit, or financial profile
  • If borrower or co-borrower loses job, this will be a reason mortgage approval can be revoked
  • There will be final conditions prior to the mortgage lender issuing a clear to close such as the following:
    • Verification of employment
    • Updated paychecks
    • Providing most recent bank statements

Overdrafts In Mortgage Process

If there are overdrafts in bank statements or not enough funds to close, mortgage approval can be revoked.

  • If borrowers quits job or got terminated prior to closing home, mortgage approval can be revoked
  • Buying a new car or trading up a new car can hurt debt to income ratios
  • This can exceed the maximum allowed DTI and mortgage approval can be revoked
  • Quitting W-2 salaried or hourly job and getting a 1099 job will get mortgage approval denied
  • Do not open new credit cards, max out credit cards, or be late with any monthly credit obligations
  • Any of these actions mortgage approval can be revoked

Dangers Of Credit Repair And Public Records Search By Lenders

Credit Repair is a huge business. A large percentage of consumers with bad credit enroll in a credit repair program.

Nobody can find out if the following gets deleted of credit report:

  • Collections
  • Charge Off Accounts
  • Late Payments

However, many credit repair companies were successful in deleting public records off consumer credit reports.

Here are examples of public records:

  • Bankruptcies
  • Foreclosures
  • Short Sales
  • Judgments 
  • Tax Liens
  • Child Support
  • Federal Student Loans Delinquencies

All mortgage lenders do a third party national public records search. Any public records that has been deleted off credit report will get discovered. Most mortgage companies issue conditional mortgage loan approvals before doing a third party public records search. Borrowers who have not disclosed public records to their loan officer and gotten a conditional loan approval can get their mortgage approval revoked when public records gets discovered.

Never Dispute Derogatory Credit Item With Credit Balance

One of the things you CANNOT DO is to dispute a derogatory credit item with a credit balance.

  • FHA and Fannie Mae mortgage lending guidelines prohibits credit disputes with a credit balance
  • The dispute has to be retracted in order for the mortgage approval process to proceed
  • The problem here is that once consumers retract the credit dispute, it will most likely lower credit scores

Qualifying For Mortgage With Direct Lender With No Overlays

Home Buyers or homeowners who need to qualify for mortgage with direct lender with no lender overlays on government and/or conventional loans can contact us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays to take mortgage inquiries. USA Mortgage is a five star direct lender headquartered in St. Louis, Missouri and licensed in multiple states.

By Gustan Cho

www.gustancho.com

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