I wrote a preapproval letter but did not close the loan. IMO, this is the "kiss of death" for loan officers.
Most times online we share our successes and not our failures.
So here goes...back in July I received a call from a first time buyer in Virginia looking to utilize the no money down program called FHA Plus with VHDA.
Basically the program allows eligible buyers with a certain income to finance the three and half percent minimum downpayment required for FHA loans. VHDA just recently increased those income limits, too.
Anyway with the borrower's credit checked, income verified, and education course completed I confidently placed my name on the $150,000 check (this is what I call my pre-approval letters, because typically it's LIKE money in the sellers bank)
After a quick weekend homesearch, the buyer had ratified contract with a forty-five day close back on my desk by Monday morning.....woohoo!
We ordered the home inspection, appraisal, and disclosures, everything was going as planned until Mr. Buyer called and said he just accepted a new job that he could not pass up. So by the next week he would be starting his new job making more money. Then came the questions (rather after the fact)....
"So how will this affect my loan approval? It should make it better right?"
Actually the opposite was true, the new position making more money turned out to be a contracted postition for only a six month period. Although the employer believed the contract would be renewed they were not willing to guarantee in writing that the employee would be retained if the contract did not continue.
As a result VHDA denied the loan for unstable employment. In my opinion, no employment is stable today and we live in an area where many workers are contractors of the government and/or companies supporting the government.
Nonetheless there are certain things you just cannot afford to do when seeking a mortgage loan and changing jobs in the middle process is one of them.
I felt terribly bad for the sellers, agents, and the buyers involved...I wrote a pre-approval that did not close.
Download my free report 7 Things Not to Do When Applying for a Home Loan and make sure this does not happen to you!