What Can Cause You To Lose Your Loan Approval?

Posted on: 4 November 2021

When you initially decide to buy a house, one of the top steps to complete is getting preapproved for a mortgage through a lender. When you complete this step, the lender gives you a letter that states they preapproved your loan request. This preapproval does not mean that the lender will definitely issue you a loan, though, as you can lose your loan approval. Here are several things to understand about this as you prepare to get a loan to buy a house.

What the Preapproval Means for You

Your real estate agent will ask you if you qualify for a mortgage loan. If you cannot produce a preapproval letter, your agent will recommend getting this before moving forward. You can get preapproved by choosing a lender and following the steps they require. The preapproval they offer means that you currently meet the requirements and criteria for a mortgage loan. When they process your application, they will decide how to respond to it by reviewing your information. The preapproval does not mean they will issue you a loan when you choose a house to buy, but it does mean that you meet the criteria needed for a mortgage loan.

The Process After Getting Preapproved

After you receive the preapproval from your lender, you will need to do several things. The primary thing you must do is to choose a house to buy that fits your budget and desires. Next, you will need to negotiate with the seller to reach a mutual deal on the house. When you have the contract in hand, you can give it to your lender. The lender will then begin processing your loan application, and they will aim to turn the preapproval into an approval. An approval guarantees the loan for you.

The Steps You Can Take to Protect Your Approval

The only reason a lender would deny giving you a loan after they offer a preapproval is for derogatory changes to your finances or credit after they preapproved your loan. Therefore, you can protect your approval by making sure your credit does not drop. You should also avoid getting a new job, racking up new debt, or taking on new loans.

If you want to buy a house with a mortgage, you might need to work hard to protect your financial situation during this time. If you have questions about preapprovals or approvals, talk to a mortgage lender today.