An accepted offer triggers the detailed financing review. Even with preapproval, new information about the buyer or property can change the lender’s decision.
Key takeaways
- A new loan, increased credit use, an employment change, lower income or modified down payment can trigger a new review.
- The lender may appraise the property to confirm the value of its security.
- Insurance issues, major work, an unusual building type, non-conforming use or certain condominium problems can affect eligibility.
The buyer’s circumstances changed
A new loan, increased credit use, an employment change, lower income or modified down payment can trigger a new review. The lender may also request updated documents.
It is preferable to maintain a stable situation between preapproval and funding and promptly disclose changes to the mortgage professional.
The appraisal does not support the price
The lender may appraise the property to confirm the value of its security. If the appraised value is below the price, financing may be reduced and the buyer may need additional cash.
This can occur in a multiple-offer situation or when a property is difficult to compare. Reviewing comparables before offering remains important even in a competitive market.
The property or structure falls outside the criteria
Insurance issues, major work, an unusual building type, non-conforming use or certain condominium problems can affect eligibility. Policies differ among lenders.
Changing the lender, borrower, down payment or source of funds may also require part of the review to restart. The deadlines and notices in the promise to purchase must then be followed carefully.