Your Mortgage Approval Isn't Final Until It's Funded

A mortgage approval is never final until it’s funded.

A host of things can “go wrong” while your home loan is underway. Some are in your control, many more are not. And just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

MSN Money ran a summary piece on the topic titled “10 Things That Can Kill A Home Loan“.

It’s an excellent article because, unlike most “get approved” articles that advise against things like buying a car before closing, or opening a bunch of new credit cards, the MSN Money piece addresses more uncommon factors that can lead to a similar loan turndown.

For example, a home may be unfundable if it’s unsuitable for human habitation — a condition you may not discover until after a thorough home inspection’s been made. Broken windows, lack of plumbing, and/or major foundation damage are all deal-breakers with a lender.

Either fix the home prior to closing, or don’t close at all.

Homes in “declining markets” have danger spots, too. Especially for conforming mortgage applicants with less than 20% equity.

Because of how private mortgage insurers operate, some homes carry tougher, ZIP code-based PMI eligibility requirements. As a mortgage applicant, it’s important to understand this because you may be PMI-eligible in one neighborhood, but not in another.

There’s others ways in which a mortgage approval can go bad, too:

• You’re self-employed and your income was lower last year versus the year prior
• Your tax return shows large amounts of unreimbursed employee expenses
• You failed to return required paperwork to the lender within a reasonable time frame

Mortgage approvals are delicate and, despite an improving economy, lenders still operate with caution. Talk with an experienced loan officer (me) and put together a game plan. More things can go wrong with that “lowest rate” offered by a rookie, rather than a market rate offered by a veteran.

The best way to beat the mortgage system is to know the rules before you start to play, and this is where I excel. If you have any questions regarding your specific situation, feel free to email me or give me a call. I can have an answer to you within the day.