• Preapproved mortgage loans can be confidence-inspiring, sometimes so much so that consumers lose sight of the fact that a preapproval does not mean a final approval. There are a whole host of factors that can affect a preapproved mortgage loan--even sink the application altogether. However, by being proactive and understanding the nature of a mortgage application, you can stave off disaster.
  
  

Appraisal

• The biggest mortgage loan killer is a short appraisal, or an appraisal that comes in lower than what is expected. Rates and payments are based on credit, yes, but also on a calculation called loan to value (LTV). To figure your LTV, divide your mortgage balance by your home's value. The lower the LTV, the lower the rate. The best rates fall in the under 80 percent LTV category. So, if you have a preapproved mortgage application based on a rate at 80 percent LTV, but the appraisal bumps that LTV to 90 percent, you'll be faced with a much higher interest rate--and payment.
  
  

Verified Income

• Many mortgage companies, in an attempt to boost business, offer preapprovals without verifying income. However, at some point in the loan process, an underwriter will need to see your pay stubs, W2s, tax returns, bank statements or business payroll. If your income is verified to be less than what you originally believed, your debt to income ratio (DIR) may prevent you from getting the mortgage. To figure your DIR, divide all expenses by your gross monthly income. Most lenders want to see a DIR under 40 percent, but some lend up to 45 to 50 percent.
  
  

New Credit Report

• Most lenders have regulations about the age of a credit report on an application--often, 30 days is the maximum age. If a preapproved mortgage application is hung up in the underwriting process for an inordinate amount of time, an underwriter may need to pull a new credit report per the lender's guidelines. While this is not always a disadvantage, if you've missed a payment or fallen behind at all during the loan process, this may negatively affect your new FICO score (a three-digit number between 300 and 850). A lower FICO score means, in almost all cases, a higher interest rate and payment.