Factors That Influence Home Loan Approval
Do you know what can stop a mortgage loan before loan closing day? It’s easy to assume that once your loan is approved it’s nothing but a waiting game. But that’s not true.
What Can Stop Your FHA Loan Before Closing Day
What stops a home loan from making it to closing day? There are a number of things to be wary of. One is negative changes in your credit report. If your FICO scores got worse after your loan application was pre-approved, your loan may be in trouble.
The same is true for those who experience or initiate a major job change before closing day. This could be in the form of changing from salary to contract, from salary to self-employed income, or similar major changes during or after you are approved for the mortgage.
Other factors include, but may not be limited to:
- You applied for more credit after applying for the home loan.
- You skipped or missed payments on your other financial obligations after the loan was pre-approved.
- You failed to disclose a financial obligation such as federal debt that is later discovered during a credit pull.
- You did not accurately disclose income or job information.
- Your income is not verifiable.
To get home loan approval, your lender must review your FICO scores, credit use, and repayment history. These are not the only factors that go into loan approval but they are crucial. If you have been working on your credit, one factor you need to pay attention to? Time.
Credit reports do not update automatically. When you begin working on your credit in advance of your home loan, it is smart to give yourself enough time not only to improve your credit but also to let those improvements catch up to your credit report.
If you allow your reports enough time to update, you’ll have a potentially smoother experience with the lender rather than having to explain that you have done the credit work but still haven’t seen the results yet.
In such cases the lender will likely ask you to wait until the official record has been updated. In the meantime, consider your credit repair or improvement to be a process of continuous improvement for the best results. Staying on top of your FICO scores is a good way to stay ready for a major application for credit should you need it.
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