Is it possible to get denied a mortgage after being pre-approved?

Written by lanae carr
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Pre-approval for a mortgage loan can be an exciting occasion. Unlike prequalifying, getting approved means your personal circumstances and financial background has held up to scrutiny and you are ready to take out a mortgage loan. It is possible that the lender will deny your mortgage after pre-approval, however.

Finding the Money

Many realtors encourage buyers to get pre-approval for a mortgage before falling in love with a home. Realtors understand that getting a pre-approval from the lender is the best way for the buyer to guarantee closing on the home. Contrary to the assumption of many buyers and real estate professionals, however, pre-approval does not mean final approval. The homeowner's circumstances often change before closing rendering them ineligible for a mortgage loan.

Closing Time

While many buyers close within 30 days of an approved purchase contract, some closing dates are set in the distant future. The farther out your closing date, the more opportunities there are for your financial circumstances to change. Some transactions, such as bank-owned properties, require a fast closing and only accept purchase offers from buyers who can guarantee funds. Fast closings usually occur within 14 days when the pre-approval letter is more likely to be valid.

What Went Wrong?

Buyers are denied mortgage loans after being preapproved for numerous reasons. Loss of income, declines in credit score or increases in monthly expenses can result in a loan denial. Maintain a consistent financial history to help better your chances of maintaining your approval. Some real estate professionals contend that unethical practices may also be at the root of faulty pre-approval letters. According to Pat Curry of Bankrate, some lenders provide homeowners with pre-approval letters with the hope of luring them in as customers. When the homeowner goes back to the lender before closing, they learn that the lender was not forthcoming about their approval status.


Pre-approval on a mortgage loan is beneficial because it usually means you can afford to purchase the property. Earnest money, ranging between 1 and 5 per cent of the purchase price, is still due to secure the contract, however. For some buyers, earnest money can amount to thousands of dollars. This money can be lost if you are unable to qualify for financing within the period indicated in your purchase contract. Review your purchase contract in detail to ensure a refund of your deposit if you are unable to receive approval for a loan before making a commitment.our purchase contract in detail to ensure your deposit can be returned if you are unable to get approved for a loan before making a commitment.

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