I applied to be pre-approved for a mortgage and submitted all of my information but the lender will not tell me if I have been approved. Why is the lender acting shady?

By Michael Jensen, Mortgage and Finance Guru

Edited by Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Updated October 20, 2020

In most cases, a lender should be able to pre-approve you for a mortgage within one business day. Lenders review your gross income, monthly debt expense and credit score to determine what size mortgage you can qualify for. Getting pre-approved should not cost you anything as it is a way for lenders to develop a relationship with you so hopefully you select them when you apply for your mortgage.

In some cases, the lender requests to pull your credit report while in other cases the lender can use your credit score provided by a free credit monitoring service for the pre-approval process. We recommend the latter approach, if possible, as it is preferable that the lender only pulls your credit report when you submit your mortgage application.

Lenders usually have their own internal pre-approval guidelines but the process should be relatively similar across all lenders and focus on your ability to afford the monthly mortgage payment and repay the loan over time. Depending on your mortgage amount and loan program, some lenders may also take the extra step and obtain Fannie Mae or Freddie Mac pre-approval for your mortgage, which provides an extra level of comfort that your loan application will ultimately be approved.

There may be a number of reasons why a lender may not be telling you if you are pre-approved. Perhaps the lender is taking more time to review your pre-approval application or perhaps there is a specific issue that requires additional information or an explanation. If you have a unique employment or credit situation you may need to submit a mortgage application to understand if you are pre-approved.  Or perhaps the type of property you want to buy requires additional scrutiny.

While these are plausible explanations, I think you likely have not heard a definitive response from the lender because you did not meet its pre-approval requirements. If mortgage lenders have good news to share -- such as you are pre-approved for your mortgage -- they do not hesitate to reach out frequently. On the other hand, if lenders have bad news to share -- such as you are not pre-approved -- you may not hear from them at all.

This does not mean that you should stop trying to get pre-approved for your mortgage, it means you should contact other lenders. Mortgage qualification guidelines can vary by lender so just because one lender does not approve you does not mean that all lenders will reach the same decision.

Additionally, if you are not satisfied with the level of service provided by your lender due to poor response time or lack of communication, then you should contact other lenders. You can use our get pre-approved form to connect with multiple lenders and get approved for your mortgage. This feature is free, no obligation and does not affect your credit.

We thought it would be helpful to provide more information about getting pre-approved to help guide you through the process. Pre-approval typically qualifies you for a specific loan amount based on current mortgage rates and closing costs. The lender usually provides a letter or online certificate outlining what size mortgage you are pre-approved for as well as the conditions of the pre-approval.

When you submit an offer to buy a home, you can provide this letter or certificate to the property seller as "proof" of your ability to qualify for the mortgage and complete the purchase transaction. Getting pre-approved can provide a competitive advantage when you are shopping for a home, especially if there are multiple offers on a property.

It is important to highlight that mortgage pre-approval is typically subject to finalizing your loan application and providing your personal financial documents such as your tax returns, pay stubs and bank account statements. At this point in the process, the lender also reviews your full credit report.

Additionally, lenders usually pre-approve applicants for a specific mortgage amount as opposed to a loan on specific property. Once your offer to purchase on a property has been accepted by the seller and you submit your loan application, the lender reviews the property appraisal report, title report, and for newly constructed properties, the final local government property inspection report, to confirm that both you and the property qualify for the mortgage. Additionally, if you are buying a condominium, co-op or planned unit development there is a separate approval process and you are required to provide additional documentation.

Review Why You Should Get Pre-Approved for Your Mortgage

So even if you are pre-approved for a mortgage, the lender still needs to provide final loan approval before your home purchase closes. Your credit report, mortgage application, property appraisal and title report are usually only valid for 60 days so it makes sense for both you and the lender to finalize and approve your loan application as soon as possible. Plus, most lenders lock your mortgage terms for a specified period of time -- usually between 30 to 60 days -- so you want to make sure that you can close your loan within the rate lock period.

We should also emphasize that changes in your credit or financial profile in between the time you are pre-approved and the time your mortgage closes may affect your ability to receive final lender approval. So just because you have been pre-approved does not guarantee that your mortgage will close.

For example if your credit score declines significantly, you take out a new loan, increase your debt balance or you change jobs, this could make it more challenging to get approved,  your mortgage terms may change or your loan may be declined. This is why we do not recommend that you make any significant financial or employment changes in between the time you are pre-approved and when your mortgage funds.

Finally, just because you are pre-approved by a lender does not mean that you are required to work with that lender to finalize your mortgage. You may find a lender that offers better terms or customer service in between the time you are pre-approved and the time you apply for your mortgage.

The table below shows mortgage rates and closing costs for leading lenders in your area. We recommend that you contact multiple lenders to find the best loan terms. Shopping for your mortgage is the best way to save money, even if you have already been pre-approved for your loan.

Sources

“Get a prequalification or preapproval letter.”  CFPB.  Consumer Financial Protection Bureau, 2017.  Web.