Are you a home buyer in New Jersey? If so, you might have some questions about home loans and the buying process. One of the top questions home buyers have is: can a loan be denied after closing?
In this post, Nancy Kowalik and our real estate experts at Your Home Sold Guaranteed Realty - Nancy Kowalik Group will answer this question.
Key Takeaways:
- Yes, it’s possible for a loan to be denied after closing, though it isn’t common. If you get pre-approval beforehand, it’s even less likely.
- The most common reason your loan would be denied is if there’s a major change in your financial situation or employment. For example, if you lost your job and failed to inform the lender or took on a large amount of debt.
- A title search might reveal issues with the property like liens, encumbrances, or ownership disputes. These problems could lead the lender to deny your loan, at least until they’re resolved.
Can a Loan Be Denied After Closing?
Yes, it’s possible for a loan to be denied after closing, though it isn’t common. If you get pre-approval beforehand, it’s even less likely. To understand how a loan can be denied after closing, it’s important to understand the mortgage loan process.
When you first apply for a loan, the lender will look at your application and give it an initial rating, such as suspended, denied, or approved with conditions. If your finances meet the lender’s requirements, you can expect your application to be approved with conditions.
Once you make an offer on a home and the seller accepts it, you’ll move into the closing process. At this stage, your lender will review your application and financial information again in order to complete the underwriting process.
At this point, the most common reason your loan would be denied is if there’s a major change in your financial situation or employment. For example, if you lost your job and failed to inform the lender or took on a large amount of debt. Another reason for a denial is if any of your documents are suspected of being fraudulent.
But if everything looks in order and the lender is able to successfully verify your employment and income, then your application will be marked as “clear to close.” At that point, you’ll officially receive your home loan.
Why Would a Loan Be Denied After Closing?
Aside from fraud and changes in your finances, there are several other reasons a loan could potentially be denied after closing:
- Not Meeting Loan Terms: It’s possible for the terms of your loan to change from the time you get pre-approved to the end of the closing process. The most common change is an increase in interest rates, which could lead your loan to be denied if you can’t afford the new rate. To avoid this scenario, explore your lender’s mortgage rate lock options.
- Asking Price and Appraisal Don’t Match: If a property appraises for less than the asking price, the lender will usually delay approving the loan until you can negotiate a different price with the seller. If a new price can’t be reached, the loan may be denied for that specific property.
- Problems Uncovered in Title Search: A title search might reveal issues with the property like liens, encumbrances, or ownership disputes. These problems could lead the lender to deny your loan, at least until they’re resolved.
- Fraud: If any fraud or material misrepresentation or illegal activity is uncovered, then a loan can be denied.
Buying a Home in Mullica Hill is Easy with Nancy Kowalik
At Your Home Sold Guaranteed Realty - Nancy Kowalik Group, Nancy Kowalik and our team have years of experience helping people buy a house in Mullica Hill and the broader South Jersey area. We can guide you on your home-buying journey and connect you with some of the top lenders in the business.
Our team commits to delivering high-quality customer service and provides several unique buyer guarantees, like our Buy it Back Guarantee.
Give us a call at (856) 478-6562 to learn more about working with us or get started finding Mullica Hill homes for sale and real estate for sale in South Jersey. You can also use the form below. Don’t have to wait to make your real estate dreams come true!
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