Loans may fall through for a variety of reasons. Here are a few common reasons:
- Inadequate creditworthiness: Lenders evaluate the creditworthiness of borrowers before approving a loan. If a borrower has a low credit score or a history of missed payments, the lender may consider them to be a higher risk and may deny the loan application.
- Incomplete or inaccurate application: Lenders require borrowers to provide detailed information on their loan application, such as income, employment history, and credit history. If the application is incomplete or inaccurate, the lender may not be able to assess the borrower's creditworthiness accurately and may deny the loan.
- Changes in the borrower's financial situation: The lender may approve a loan based on the borrower's financial situation at the time of the application. If the borrower experiences a significant change in their financial situation, such as a job loss or a drop in income, the lender may no longer consider them a good candidate for the loan.
- Appraisal issues: If the loan is for a property purchase or refinance, the lender will typically require an appraisal to determine the value of the property. If the appraisal comes in lower than expected, the lender may not be willing to lend the full amount of the loan.
- Documentation issues: Lenders require a variety of documentation, such as income verification and bank statements, to support the loan application. If the borrower is unable to provide the necessary documentation, the loan may be denied.
It's important to note that loans may fall through even after the application has been approved, for example, if the borrower is unable to meet the terms and conditions of the loan or if the lender discovers fraud or misrepresentation during the underwriting process.
