How Your Mortgage Approval Can Be Revoked
Getting a mortgage loan approval means that you meet the basic qualifications with regards to income, credit, and assets. Prior to your approval, a mortgage loan underwriter has reviewed your income, credit, credit report, credit history, and credit scores. The underwriter has reviewed your tax returns, bank statements, W-2s, and letters of explanations with prior derogatory credit issues. Just because you got a mortgage approval does not mean you should take your mortgage approval for granted. A mortgage approval can be revoked at anytime if you do not stay mortgage approved until the closing of your 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 be the cause of your mortgage approval to be denied. There are certain things that you need to abide by and stay clear of during your mortgage approval process. Remember that your mortgage approval can be revoked and 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 your mortgage lender, but because of the circumstances such as you might be purchasing a short sale, foreclosure, or new construction where it is beyond your control and the control of the seller’s side. During the mortgage application/approval process, you need to make sure that your financial and personal profile does not change. A mortgage approval can be revoked at anytime if there are changes to your personal, credit, or financial profile. If you or your co-borrower lose your job, this will be a reason your mortgage approval can be revoked. There will be final conditions prior to the mortgage lender issuing a clear to close such as verification of employment, update paychecks, and providing most recent bank statements.
Overdrafts In Mortgage Process
If there are overdrafts or not enough funds to close, your mortgage approval can be revoked. If you quit your job or got terminated prior to closing your home, your mortgage approval can be revoked. Buying a new car or trading up a new car can hurt your debt to income ratios and exceed the maximum allowed DTI and your mortgage approval can be revoked. Quitting your W-2 salaried or hourly job and getting a 1099 job will get your mortgage approval denied. Do not open new credit cards, max out your credit cards, or be late with any monthly credit obligations. Any of these actions your mortgage approval can be revoked.
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 you retract the credit dispute, it will most likely lower your credit scores. The mortgage approval can be revoked if your credit scores drop, especially if your credit scores are already low.
By Gustan Cho