Why was my underwriting denied, even if I was preapproved?
While underwriting approval may not be the greatest of your concerns, it is still an aspect to keep in mind when going through the loan process. If you are pre-approved, don’t assume it's an automatic final approval, because pre-approval is only the first step in the loan process. Even if you are pre-approved, your underwriting can still be denied. Being pre-approved will make sure you have a good credit score, verify your income, and assure that you will be able to pay back the loan amount. But again, pre-approval is only the first process to getting a loan. Once you’ve been pre-approved, your file must then go to the underwriter who will take a deeper look into your financial stability. Your loan is never fully approved until the underwriter confirms that you are able to pay back the loan.
Underwriters can deny your loan application for several reasons, from minor to major. Some of the minor reasons that your underwriting is denied for are easily fixable and can get your loan process back on track. These can include additional documentation verifying your income and employment or a letter of explanation as to why you had a large withdrawal from a bank account. If unresolvable problems are found during the underwriting process then you may need to take some time to resolve these problems before completing the loan process. Some of these problems that might arise and have your underwriting denied are insufficient cash reserves, a low credit score, or high debt ratios.
If you are really determined to complete the loan process then it is best for you to maintain your financial stability status. Here are a few suggestions to help you do so:
Don’t do anything that could harm your credit score
Don’t switch jobs
Save up as much money as you can to devote to closing costs, down payments, etc.
Continue making your other payments on time, pay off your debts, and don’t do anything that will increase your debts
Don’t deduct funds from your savings account
Once you have resolved the issues for which the underwriting was denied, you are ready for your loan process to get back on track.
Haven’t started the loan process yet, and you’re ready to get started? Contact Midwest Equity Mortgage, LLC to set up an appointment or get started now
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