Mortgage Pre-Approval Can Fall Flat on Home Buyers

Columbus Home Buying TipsA couple of our Buyer-Clients recently experienced a last-minute problem with their pre-approved mortgage. They came to us with a pre-approval in hand from a reputable lending institution, though the actual loan officer was someone new to us. Things looked good for weeks, until two days before closing!

What happened is this: there was an input error on the loan application, concerning the start date of employment. Somehow, this went undetected in prior verifications until the last minute. The Buyer-Clients did not have a copy of the loan application, and had no idea there was any kind of problem until the lender abruptly denied the loan. (The length of employment didn’t meet the underwriting criteria for Freddie Mac or Fannie Mae.)

This is why we make sure our Buyer-Clients are protected by a financing contingency in the purchase contract! Despite your best efforts, things beyond your control can happen. Having a mortgage denied is always unpleasant, but the stress of being denied two days before closing is incredible. The last thing you’d want, is to be on the hook for a home purchase that you could no longer finance! A financing contingency should never be waived, no matter how “hot” the market is.

Fortunately, in this case, we were able to find another lender who was willing to step in, and accept the length of employment as sufficient. The closing date had to be pushed back by about 12 days, but our Buyer-Clients are now happy homeowners.

The moral of the story: a mortgage pre-approval is a reasonable assurance of financing, but it isn’t an iron-clad commitment by the lender. The mortgage underwriting process is refreshed shortly before closing, re-checking employment, income, debt levels, credit scores and banking information.

It’s important not to “rock the boat” before closing. Once you have a pre-approval in hand, do not make big purchases, make big cash deposits or withdrawals, or change jobs.

Even then, snags can happen. Ask your lender for a copy of the mortgage application and double-check the information. Stay in touch with your lender throughout the home buying process, and respond promptly if your loan officer contacts you with questions.

As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.

Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!

Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!

Andrew Show
Broker, CEBA-M, CNE, CSP, PSA, e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services, www.buyershome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax

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