A mortgage preapproval can look official. It can have a nice letterhead, the buyer's name, purchase price, and loan type. And still be weak. That is the part buyers and agents learn the hard way.
Not All Preapprovals Are Created Equal
A preapproval is only as strong as the review behind it. If income, assets, credit, debts, and program guidelines were not reviewed correctly up front, the loan can fall apart later — usually at the worst possible time, because apparently real estate enjoys drama.
Common Reasons Preapprovals Fall Apart
- Income was calculated incorrectly
- Variable hours were averaged wrong
- Bonus, overtime, or commission income was not documented properly
- Self-employed income was misunderstood
- Bank statements revealed undisclosed issues
- Large deposits were not sourced
- Debt-to-income ratio was too tight
- Credit changed before closing
- Student loans were calculated incorrectly
- Down payment assistance rules were missed
- Property condition did not meet loan requirements
- The buyer changed jobs or took on new debt
The good news: Most of these problems are avoidable if the file is reviewed properly before the buyer starts writing offers.
Income Is One of the Biggest Deal Killers
Income is not always as simple as looking at a paystub. A buyer may earn variable hours, overtime, bonus income, commission, self-employment income, seasonal income, or multiple job income. That income may need a history, may need averaging, and may not all count. A buyer can feel like they make enough money and still not qualify for as much as they expected because underwriting has specific rules for calculating qualifying income.
Assets Can Create Surprises
Buyers often think "I have the money, so I'm fine." Maybe. But lenders also need to document where the money came from. Large deposits, cash deposits, transferred funds, gift funds, and business funds may all need documentation. Mystery money is not cute in underwriting.
Credit Can Change Before Closing
Do not do these things before closing: Open new credit. Make large purchases. Finance a car. Co-sign for anyone. Run up credit cards. Miss payments. Switch jobs without talking to your lender. The new furniture can wait. The car can wait. The couch is not worth blowing up the mortgage.
A Strong Preapproval Starts Early
A stronger approval process reviews the buyer's file before the offer is written. That includes credit report, income documentation, asset documentation, employment history, debt-to-income ratio, loan program fit, down payment assistance eligibility, property type concerns, and potential underwriting red flags.
For Real Estate Agents, This Matters
Agents work hard to get buyers under contract. A weak preapproval can waste time, damage relationships, and put earnest money at risk. If you are an agent in Illinois, Indiana, Tennessee, or Alabama, the lender matters. You do not just need a fast preapproval. You need a correct one. Fast and wrong is still wrong.
Bottom Line
A preapproval is not just a piece of paper. It is a promise that should be backed by real review. Buyers deserve better. Agents deserve better. Sellers deserve better.
Let's review the file before it becomes a problem.
If you are a buyer or agent dealing with a shaky preapproval, let's review the file before the deal turns into a group therapy session.
Educational Disclaimer: This content is for informational purposes only and does not constitute financial, legal, or mortgage advice. Loan programs, guidelines, and program availability are subject to change. Contact Kim Dobyns directly for a personalized review. Kim Dobyns, NMLS #204859 · Union Home Mortgage Corp., NMLS #2229 · Licensed in IL · IN · TN · AL · Equal Housing Lender.