"But, I Was Prequalified for a Mortgage"

“But, I Was Prequalified for a Mortgage”

Of course you were, but no one will be able to get you the mortgage that you need to purchase the home you want to buy. Anyone that knows what they are doing in the mortgage business will always get upset with fellow loan officers that will give out a bad prequalification or preapproval and unfortunately it goes on much too often.

One of my Realtor referral partners contacted me regarding an offer she received on a home, but something seemed not to be right. The prequalification letter said nothing and she wanted the other agent to let me speak to the prospective buyer. I knew the other agent, so the agent asked this buyer to contact me, which he did.

I asked a number of questions and immediately knew there was a problem. This person told me that he was self-employed and just didn’t understand the difference between how much income his business brought in and how much his net was after his expenses. I understand that you brought in $160,000 in revenues, but you paid taxes on $16,000. Even after I was able to get the amount that was used for depreciation, his income could be $22,000.

I’m sorry, you can’t qualify for a $315,000 purchase with 10% down, the math just does work. I explained the reasons why he doesn’t qualify and that the prequalification will not work. He was not a happy camper and told me that he needed to find another lender. I told him, that it won’t matter, he just wasn’t qualified to buy at this time. I sent an email to both Realtors, explained that this prospective buyer was not qualified. Sad when something like this happens, it puts all good loan officers in a bad light.

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