Last Minute Lender Issues That Can Ruin Your Day, and Your Closing
I doubt anyone will disagree that the mortgage process can be a real challenge. There are more requirements than before, a wealth of documentation that needs to be provided, and an administrative process that sometimes makes you shake your head at how long it takes. It may feel like they don’t even care that there are deadlines to be met.
The following are are not necessarily issues that will happen to you, as things vary from lender to lender. But they are all things I have encountered recently and no doubt the list could be longer – we’ll get that from the folks who comment here.
But as a buyer working with a lender and needing to meet certain deadlines (like getting your loan commitment by Day 17 per the California contract [that’s a typical time frame, but a negotiable item] and closing by a certain date), it’s best to be prepared for what you might face, no matter how good your credit, the amount of money you have or make, or the size of the loan.
Many of these items are aggravating, and even appear picayune and without justification. But lenders want them and if you don’t comply you won’t get the loan approval.
And worse, so often they come up very late in the process, like when you are already supposed to have your approval (“why didn’t they ask for this before”) and in some cases can delay, or even derail your closing.
If you have not gone through the loan process for years you may want to pull out your hair at times.
Here are some real life examples:
A request for all copies of the bank statements(s) again, including any blank pages (I get why but buyers often don’t)
A letter from the employer stating you work at your home address and not at the corporate office
Documentation proof that your deposit check has cleared your bank
More than one request to sign the 4506 T form to request a transcript of your tax records from the IRS because the signatures are too light, or for some other reason. One client had theirs rejected twice by the IRS. You can’t argue with the IRS (buyers often ask - why do I need this when I just gave them 2 years of tax records)
2 months of checks (copies) you are receiving from a pension, annuity, etc. Hard to do if you just started getting these funds
Complete paper trail of funds transfers into and out of accounts (where did you get that deposit money; what was that large withdrawal from your checking account)
Complete copies of the contract with original signatures (not the electronic ones that were provided at the start of the mortgage process), at the last minute
Don’t even think of making any big purchases or doing anything with your credit cards. And be sure no one has access to your credit card who might go on a spending spree without your knowledge. Your credit may be checked right before closing (I heard of a buyer whose ex-wife still had access and racked up a huge credit card debt 2 days before he was supposed to close. Guess what didn’t happen).
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The intent is not to scare you but simply to prepare you for the reality of getting a loan. It’s a lot of work, and sometimes the information you are asked to provide does not make sense and is a pain to have to assemble. It helps to find out the reasons.
And it helps to stay in close contact with your loan officer and your agent.
But no matter how diligent you may be, some requests of issues can still come up at the last minute that can drive you crazy. And delays are an aggravation for both sides of the fence.
Any stories you would like to share?