Getting pre-approved for a mortgage is an exciting milestone in the home-buying journey. It’s your green light to start house hunting and envisioning your future home. But here’s the catch: preapproval isn’t the final step. A mortgage can still be denied—even after funding—if you’re not careful. Let’s explore the top 10 ways this can happen and how to avoid them.
“I’ve helped hundreds of families find their perfect home, gaining insight into what makes each property shine. But buying a home isn’t just about the right property—it’s about navigating mortgage complexities.
Mortgage approvals can unravel due to common missteps like changing jobs, taking on new debt, or forgetting to pay bills. Even closing a credit card or failing to document large deposits can cause issues. The property itself matters too; homes must meet lender guidelines and appraise correctly.
Avoiding these pitfalls keeps your dream home within reach. I’m here to guide you to the right property and through the financial steps for a smooth purchase.”
What Is a Mortgage Preapproval?
A mortgage preapproval is a lender’s initial evaluation of your financial health. This process involves verifying your:
Income
Employment status
Credit standing
Once approved, you’ll receive a preapproval letter, valid for about 60-90 days. However, remember that preapproval is not a guarantee of funding. Your financial situation and the property must still pass final checks, including an appraisal.
What Is a Mortgage Commitment Letter?
A mortgage commitment letter is a formal agreement from your lender confirming that you’re qualified for the loan. This step typically follows preapproval and takes 3-5 weeks to process. Even with a commitment letter in hand, you must meet specific conditions to close the deal.
10 Ways to Lose Your Mortgage After Preapproval
1. Changing Employment
Switching jobs mid-process can derail your mortgage. Lenders value stable employment. If a better job opportunity arises, consult your lender first.
2. Misleading Employment Details
Never provide inaccurate information about your job. Lenders verify employment before closing, and discrepancies can result in denial.
3. Applying for New Loans
Taking on new debt—like a car loan—can spike your debt-to-income ratio and jeopardize your mortgage approval. Resist the temptation to finance furniture or other large purchases.
4. Large Undocumented Deposits
Unexplained large deposits in your bank account can raise red flags. Always provide proper documentation, such as a letter of explanation for gifts or sales proceeds.
5. Getting Divorced
If you’re applying jointly, a divorce changes your financial profile. This can lead to a smaller loan or outright denial.
6. Missing Credit Card Payments
Late payments can damage your credit score and raise doubts about your reliability. Stay on top of all bills.
7. Closing a Credit Card Account
Closing an account lowers your available credit and can hurt your credit score. Keep accounts open until after closing.
8. Paying Rent Late
A history of on-time rent payments signals responsibility. Don’t tarnish this record before closing.
9. Skipping Your Last Mortgage Payment
If selling a home, ensure all mortgage payments are current. Skipping one can lead to complications or denial.
10. Appraisal Issues
If the home’s appraisal value falls short, your loan may be denied. Work with your real estate agent to address discrepancies.
Final Thoughts
Your mortgage isn’t set in stone until the closing documents are signed and the funds are disbursed. To avoid last-minute heartbreak:
Maintain financial stability.
Communicate openly with your lender.
Avoid big financial changes until after closing.
By steering clear of these 15 pitfalls, you’ll keep your dream home well within reach.
ABOUT THE AUTHOR
I’m Kevin Wood, a trusted professional in residential real estate who has served southern Arizona and the surrounding areas since 2005. My knowledge and experience covers a wide range of topics including general real estate, mortgages, financing, seniors, moving, and home improvement.
I can be reached at Kevin@thewoodgrouptucson.com or by phone at 520-260-3123. For the past 19+ years, I’ve helped over 600 families move in and out of southern Arizona and constantly rank among the top 10% of realtors nationwide for performance and client satisfaction.
Are you planning a move? I’m passionate about real estate and enjoy sharing my knowledge and skills in marketing.
I serve people with real estate needs in the following areas of southern Arizona: Tucson, Vail, Corona de Tucson, Sahuarita, Green Valley, Oro Valley, Marana, Picture Rocks, Catalina, Saddlebrooke, Benson, Tanque Verde, Three Points, and Red Rock.
