But there’s a catch: Just because you’ve been pre-approved for a loan doesn’t mean it’s guaranteed.

There are several reasons why lenders can reject your pre-approved loan, including:

• Credit score changes

• Income changes

• Job changes

• Incorrect information on loan application

• New negative information on loan application

Let’s explore these perils of pre-approval and how to avoid them.

Credit Score Changes

One of the biggest reasons your mortgage loan can be denied after pre-approval is if your credit score changes.

During pre-approval, lenders evaluate your credit score to determine your mortgage loan limit. They also examine your loan score to note any changes that contradict the loan conditions.

For example, a lender can deny your loan if you’ve been pre-approved for a mortgage loan with a credit score of 700, which drops to 680 due to late credit card payments.

Income Changes

Another reason your mortgage lender can reject your pre-approval is due to changes in your income.

Mortgage providers evaluate your income during the pre-approval process. However, they can deny your loan if your income decreases before you apply.

Say you’ve received a pre-approval for a mortgage loan with a salary of $100,000 per year, but your salary drops to $80,000 before applying. This decrease can result in a loan denial.

Job Changes

Mortgage lenders use your employment status during the pre-approval process to determine your eligibility for a loan. However, they can reject your loan if you switch jobs before applying for it, especially if it’s a new and unstable posting.

Suppose you applied for a mortgage pre-approval while working at a well-established organisation but switched to working at a startup before the loan application. In that case, your lender will deem you unsuitable.

Incorrect Information on Loan Application

False or inaccurate information about your income, employment status, or assets can prevent you from getting a loan. You should always be transparent and honest when filling out your loan application, lest your mortgage lender bans you from receiving your loan.

Exaggerating your income is a common example of false information. While it might raise your loan limit, your mortgage lender will always investigate the details on your application to confirm your eligibility. Once they discover you lied, they’ll automatically reject your loan application.

New Negative Information During Loan Application

If your mortgage lender discovers you took on new debts or liabilities during your loan approval process, they can reject your application. New information about your desired property, such as zoning issues or structural problems, can also result in a loan denial.

Get Your Dream Home Today

To protect yourself from loan denials, you must maintain a good credit score, avoid big changes in your income or employment, provide accurate information on your application, and look out for new negative information during the loan approval process. Remember that a loan pre-approval isn’t a guarantee, and you must maintain a stable financial status to get your dream home.

It’s a dream come true for anyone, but the process can easily overwhelm you, especially if you’re unaware of the potential risks and mistakes.

But don’t worry, that’s why you’re here. We’ll explore some of the biggest mistakes that first-time home buyers make, giving you tips to avoid them.

From not getting approved for a mortgage to overlooking the importance of a home inspection, we’ve got you covered.

1. Ignoring Long-Term Costs

Many first-time homebuyers assume that a mortgage plan is the most obvious and only cost of owning a home.

However, there are many other expenses that you must consider before closing the deal, including:

• Down payment: A percentage of the property’s price you pay upfront.

• Closing costs: These include appraisal fees, application fees, lender fees, property taxes, loan origination fees, mortgage insurance, and more.

• Homeowners insurance: An insurance cover for house damages and the assets inside. A mortgage provider also requires it.

• Homeowners Association (HOA) fees: Depending on the HOA fees, cover trash pickups, landscaping, and other services.

• Moving costs: The time, effort, and resources needed to move into the new home.

• Property taxes: Monthly fees based on your property’s assessed value, like utility bills and home maintenance fees.

2. Ignoring Mortgage Pre-approvals

A mortgage pre-approval from a certified lender gives you a realistic budget to help narrow down your home search and avoid wasting time on unaffordable properties.

Similarly, a mortgage pre-approval shows a seller or real estate agent that you’re a serious buyer and have the financial backing to close the deal. This makes your negotiation efforts more sustainable, increasing your chances of getting your dream home.

3. Skipping Home Inspections

Home inspections can uncover potential issues with a house that aren’t immediately visible to the naked eye. Skipping this service can be costly, especially when unexpected repair costs emerge.

A professional home inspector can check the property for any structural, electrical, or plumbing issues and potential health and safety hazards. The results of an inspection can also help you negotiate the final sale price.

4. Settling for the First Mortgage Lender

The first mortgage service provider you meet with isn’t always the best option. Other lenders could offer better rates and terms in their mortgage contracts.

Therefore, shopping for the best rate can help you save a lot of money during premium payments. Be sure to research and compare rates from multiple lenders to find the best deal.

5. Forgetting About a Contingency Plan

You should have a contingency plan in place in case problems arise during the buying process. Such issues include unexpected expenses or repairs, and an emergency fund ensures you’re prepared for anything.

Steering Clear of the Home-Buying Pitfalls

Buying your first home is super exciting, but without proper preparation and guidance, it can be a journey full of costly mistakes. By keeping in mind the biggest blunders that first-time home buyers make, like ignoring home inspections and settling for the first mortgage lender, you can ensure a smooth and successful experience.

Don’t be afraid to ask questions, do research, and get professional advice. Your dream of finding the perfect home can come true with a little effort and the right approach.