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Know Why Youíre Decline
Been wondering why you are still disapproved and your application is declined even though you have received pre-approval and found a property to purchase? There could be reasons why you are declined for formal approval.
The most familiar reasons are:
The pre-approval was worthless: If from the beginning, you had an on the spot approval or system generated approval then you loan was never really approved. In that case, therefore, your loan will be declined because it does not meet and in fact never did meet the lenders policy.
The LMI provider declines your home loan: Your bank possibly will approve the loan; however, ten the bank may need approval from their Lenders Mortgage Insurer as well if your loan amount is more than 90% of the property value. Generally a loan is pre-approved by the LMI provider who has unlike guidelines to the lender. The Insurer may reject your loan.
The security property is unacceptable: The property that you are purchasing is not appraised when you apply for a pre-approval. When you notify the bank of the type of security property you are buying, they may not approve the loan because of the peril implicated. You can find a list of the types of properties that are usually improper to lender on your property types page. Most people arenít conscious that their bank may not accept inner city apartments, units under 50m2 or hobby farms, so they sometimes buy them without first examination with their bank.
The pre-approval has expired: Pre-approvals are usually valid for three to six months, depending on the lender. Your pre-approval will no longer be valid if it takes you longer than this to find a property.
Your situation has changed: The lender will re-assess your application if you change jobs, get a car loan / credit card or have some other aspect of your situation change, since your loan was pre-approved. If you no longer congregate their lending policy, your loan will be declined.
The lenderís policy has changed: Some lenders will honor pre-approvals that are lodged before their policy changes; others will only formally approve your loan if it meets their new lending policies. Most lenders tweak their lending policy on a monthly basis.
Interest rates have increased: If interest rates boost then the maximum amount you can borrow will cut. Initial home buyers often get a pre-approval for the maximum loan amount possible. This means that if the rates increase, their formal approval for that loan amount may be declined.