Murphy's Law says "Anything that can go wrong will go wrong." Unfortunately, that adage holds true in the mortgage approval process. Any number of things can take your pre-approved client from homebuyer to sideline sitter.
While the list of issues that can arise between initial pre-approval and closing is long and varied dependent on the client's situation, one thing is always consistent. Problems, last minute surprises and cancelled closings are everyone's worst nightmare.
Here are a few of the hiccups I've encountered recently and while some may sound funny, there's never anyone chuckling when the loan is denied.
What Can Go Wrong After Pre-Approval? A lot!
- Your landlord refuses to verify how much you pay in rent and how long you've been renting.
- Your employer declines to verify that you work for them and will not supply us with written or verbal proof of your employment.
- You thought the paperwork I requested was something everyone but you needed to provide and that it could be returned to me when you felt like getting around to it.
- You failed to mention that your income is made up of a very small hourly wage and a very large part comes from cash tips and cannot be verified.
- There are large tax deductions for non-reimbursed employee business expenses and I now have to subtract those from your income.
- You changed jobs 2 weeks ago and forgot to tell me until we tried to verify your employment and were told you no longer work there.
- Your new home is located in a flood zone and you don't want to pay for the hefty flood insurance policy.
- Your down payment gift for $10,000 is accompanied by a $6,000 gift letter.
- The house you're purchasing appraised below the purchase price and the seller is not willing to budge.
- You shredded the bank statements and pay stubs I need and do not have internet access, email or apparently a phone since you're unable to now supply them to me.
- You forgot to tell me that your current rental lease does not end until 3 months after closing and you cannot afford both house payments.
- You supply your tax returns only for me to find that you own 3 companies, not the 2 you initially disclosed. You also forgot to mention that all of them have taken a loss in the last 2 years. Loss = no income = no longer qualified.
- I told you to lock, but you thought rates would go down. They steadily moved up and now you don't like the payment.
I know we all have our stories. What one deal breaker have you run into recently?
What Happened to My Loan Approval was written by Rebekah Radice.