This is a good list of the pitfalls during the loan approval process. You can also add "applying for other credit before closing" to the list. I have heard numerous stories where a new credit purchase before closing raised a flag to the bank and caused a problem with the loan.
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.
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Rebekah Radice | Mortgage Loan Originator
T: 719.387.1368 | Email: firstname.lastname@example.org | Website: http://rebekahradice.com |CO & NMLS Licensee: LMB100010938 & 288596 | Benchmark Mortgage dba Ark-La-Tek Financial Services, LLC | 12 E. Kiowa |Colorado Springs, CO 80903
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