How To Make Sure Your Mortgage Pre-Approval Doesn't Fail

For most people, shopping around and getting pre-approved seems pretty straightforward.

However, pre-approval is only half the battle. It's often a real estate agent's nightmare to find out that a person's lending or mortgage falls through since they're not guaranteed to close (even with a pre-approval).

There are 4 criteria that could cause your mortgage pre-approval to fall through:

1. Income Drop

If your income drops drastically, a lender may choose not to honor their pre-approval. This means that if you lost your job, your salary is cut, or any other way your income is changed, a lender may choose to cut your mortgage.

A lender will often ask you at closing to verify and sign documents that verify your current income at the time of application to ensure that your income is true.

2. Low Credit Score or Significant Change In Credit Score

There are multiple ways this can happen:

• You declare bankruptcy.
• You have an account that goes into collections.
• You miss a credit card payment.
• You close a credit card.
• You open a new credit line.
• There's a mistake on your credit report that needs to be fixed.

Generally speaking, if you're at the point where you can purchase the home and you have a pre-approval letter, you do not want to do anything that can change your credit. Continue the course you were on before the pre-approval, and your credit should stay roughly the same.

3. Debt Level Change

Often, excited new homeowners will go out and purchase large items that go alongside their home purchase. For example, a new homeowner may be tempted to go purchase a car or new, expensive furniture.

This, however, is not a good idea. Adding any new credit lines will drastically change not only your credit score, but also your debt level.

This is also because adding new debt changes your Debt-To-Income Ratio. To review: