Are you looking to buy your dream home? Have you received a mortgage pre-approval and think you’re all set? Think again. Getting pre-approved for a mortgage is not a guaranteed green light from a lender. In fact, there are several factors that can turn your mortgage pre-approval upside down.
Why Isn’t Mortgage Pre-Approval a Guarantee?
Pre-approval is just an initial step in the home-buying process. It’s based on a preliminary review of your finances. While this initial review can make you feel secure, things can change and affect your final approval.
One of the biggest reasons pre-approved mortgages fall through is a change in income. Whether it’s a job loss, a reduction in overtime, or even a decrease in additional income like bonuses, these variables can greatly influence the lender’s final decision.
Credit Score Fluctuations
A dip in your credit score after pre-approval is another common pitfall. This can happen if you make large purchases on credit, open new credit accounts, or even miss a payment. Always keep an eye on your credit score after receiving pre-approval.
Incurring more debt after pre-approval can raise your debt-to-income ratio to an unfavourable level, which is a significant red flag for lenders. This can include taking out new loans or maxing out existing credit lines.
Another often overlooked factor is property appraisal. If the home you’re eyeing is appraised for less than your pre-approved amount, the lender may decide not to finance your mortgage at all.
So, can pre-approved mortgages fall through? Absolutely. Stay financially stable and in constant communication with your lender to avoid unpleasant surprises. Being informed and prepared is your best defence against a mortgage pre-approval reversal.
Contact Us for Expert Guidance
If you’re navigating the complexities of home financing, our team is here to provide expert guidance. Contact us today to ensure your home-buying journey is a successful one.