We applied for pre-approval for a mortgage with Quicken Loans in mid-January of this year, 2009. We were pre-approved, over the phone, after answering several questions regarding income, debt, and giving personal information to the rep so she could run our credit. We were told we were pre-approved for a $100,000 home, with 3.5% down, and would be required to pay approvimately $5100 in closing costs. We were given instructions to go ahead and begin searching for a home, and when we found the one we wanted to purchase, to submit our purchase agreement to Quicken Loans and also to pay $500 earnest money to them.
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We went ahead and began our house hunt. We found a house we loved, and put in an offer, but it was not accepted and we were not willing to pay the full asking price. So, we continued to look for our home.
The rep who we had been speaking to explained to us that our pre-approval was good for 90 days, after that time, we would need to reapply. Just yesterday (March 14, 2009), however, we received a letter from Quicken Loans telling us we have been denied for a mortgage at this time. The reasons were because of negative accounts on our credit, and length of credit history.
I was quite angry because for the last two months, we had been assured that we were pre-approved with this lender, and had been looking for a home all this time.
I understand that some lenders offer a pre-qualification, and that is not very reliable, but we were given an actual pre-approval. Our 90 days had not even run out. This letter sort of came out of nowhere, every so often, the rep would check in on us regarding the status of our house hunt, and never once mentioned that something like this would happen. I feel that we should have been told in advance that their pre-approval is not that much of a guarantee at all. I understand that a pre-approval does not necessarily mean that you will receive the financing during the final underwriting process, but when you receive a pre-approval, you should be able to rely on that, and know that unless your financial situation changes between the time you are pre-approved, and the time you are ready to buy, that you will be able to buy your home.
Maybe Quicken Loans should do a more thorough analysis of the customer before issuing a pre-approval if they are just going to turn around later and decide to disqualify you without warning.
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