This BLOG On Mortgage Approval Can Be Revoked During Mortgage Process Was UPDATED On January 30th, 2019
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 underwriter has reviewed the following:
- Income
- Credit
- Credit report
- Credit history
- Credit scores
- Types of derogatory credit of the borrower
The underwriter has reviewed the following:
- Tax returns
- Bank statements
- W-2s
- Letters of explanations with prior derogatory credit issues
In this article, we will cover and discuss how conditional loan approval can be revoked.
Conditional Mortgage Approval
Just because mortgage applicant got a mortgage approval does not mean they should take conditional mortgage approval for granted:
- Mortgage approval can be revoked at any time until the closing of mortgage loan
- There are times where clients get 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 the mortgage approval process
- Remember that mortgage approval can be revoked
It happens 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 the 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:
- Mortgage approval can be revoked at any time if there are changes to personal, credit, or financial profile
- If borrower or co-borrower loses a 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 quit a 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.
Mortgage Approval Can Be Revoked During Public Records Search
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.
Public Records
Here are examples of public records:
- Bankruptcies
- Foreclosures
- Short Sales
- Judgments
- Tax Liens
- Child Support
- Federal Student Loans Delinquencies
All lenders do a third party national public records search. Any public records that have been deleted off credit report will get discovered. Most mortgage companies issue conditional 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 get 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 lending guidelines prohibit 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 a mortgage with a direct lender with no lender overlays on government and/or conventional loans can contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to take mortgage inquiries. Gustan Cho Associates is a five-star lender headquartered in Lombard, Illinois and licensed in multiple states.
