pre-approved loans being denied?

[financeguy_IHB]

I am planning on putting 20% down, my credit score is great, and have therefore been pre-approved for a loan from a direct lender. However, a lot people have been telling me that when it comes time to actually getting a the loan, a lot of people get denied even though they were pre-approved. Has anyone actually experienced this? Others tell me that now a lot of leaders are requiring more that 20% (like 30 or even 40%). Do you see this trend increasing? That would be pretty alarming.

 

[no_vaseline_IHB]

Smells like Teen Spirit (aka 1991).



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It was pretty standard back then, and I keep hearing about happening now. Can't be just luck - can it?

 

[LoudRoar_IHB]

Traditional lending is slowly trickling back, but due to the crisis and market ambiguity, lenders are "overequitizing" loans to account for this uncertain risk, hence they ask for 30 to 40%. You must realize that if Bush and Obama did not make a stimulus plan, there would be no loans. That said, the market would adapt to 100% cash transactions, significantly lowering home prices. There is plenty of capital going into investing in real estate, but they dont ever invest in the real estate. They merely buy the loan, which is basically buying rights, in hope of a stream of payments or the actual property at a future date. Rumors are that these investors NEVER pay more than 55% max face value of the loan. I don't know what to think of it either but buyers should beware of what they sign up for.