Delays In Home Loan Closings And How To Avoid Them
This BLOG On Delays In Home Loan Closings And How To Avoid Them Was UPDATED On December 9th, 2018
Most mortgage loans can close in 30 days or less.
- However, some mortgage loan closings can get delayed for several reasons
- Whether you are a purchase borrower or a refinance borrower, nobody likes delays in mortgage loan closings
- The key to avoiding delays in closings is to complete mortgage application as accurately as possible and provide lender all of the documents they request
In this article, we will cover and discuss Delays In Closings And Ways In Closing On Time.
Mortgage Documents Required
Every bit of information on your mortgage application will be verified.
- If mortgage applicants state that they have $50,000 in assets, assets needs to be verified by providing bank statements, investment accounts, 401k, or other documents
- Assets that cannot be verified cannot be used and cause delays in home loan closings
- Need to provide all pages of bank statements and asset documents including blank pages
What Borrowers SHOULDN’T Do During Mortgage Process
Please do not apply for new credit during your mortgage loan application process.
- Credit inquiries will cause delays in mortgage loan closings
- This is because underwriters will request a letter of explanation on why they are applying for new credit
Credit Inquiries are normally hard hit on a credit report:
- Credit scores to drop with hard inquiries
- Too many credit inquiries will alert creditors and lenders and are viewed as negatives
- The mortgage loan underwriter will ask for an explanation from the borrower to explain why the borrower has applied for credit and would want a written explanation on the outcome
- This too can cause delays in closings
Recent Late Payments Can Be Delays In Home Loan Closings
Never be late on a monthly payment, whether it is a credit card payment or an installment loan payment.
- Being late on a payment will definitely drop credit scores:
- Will cause delays in home loan closings.
Being late on monthly payment can even disqualify pending mortgage loans altogether if there is no good reason for being late.
Reasons For Delays In Home Loan Closings
Other Delays In Closings include if the home appraisal comes in lower than anticipated.
- When the home appraises lower than the purchase price, the borrower loan officer can contest the appraisal
- This will definitely cause Delays In Home Loan Closings
- Contesting an appraisal will probably cause the longest delay
- Contesting an appraisal can cause Delays In Home Loan Closings for more than two weeks
- Having large deposits or large withdrawals on bank accounts will definitely cause Delays In Home Loan Closings
- Any out of the ordinary deposits or withdrawals greater than $200.00 needs to be sourced and explained to underwriters
From the time applies for the mortgage loan to the time the home loan closes, borrowers should be extremely careful on not being late on monthly payments:
- They should not open new credit, and not make any large purchases
- They cannot purchase any high ticket item, need to monitor their bank accounts, and must religiously pay their monthly debt obligations on time
- Many borrowers get excited with buying a new home that they get new furniture credit cards
- They often charge up high ticket items like furniture, lawn equipment, and other furnishings for their new home
This causes their new mortgage loan to be in jeopardy due to higher debt to income ratios.