Gustan Cho The Mortgage Expert,
Publish On: June 27, 2023
This guide covers how to avoid delays in home loan closings. Most mortgage loans can close in 30 days or less. However, some mortgage loan closings can get delayed for several reasons. There should be no reasons for delays in home loan closings, says Dustin Dumetre, a senior loan officer at Gustan Cho Associates:
The only reason for delays in home loan closings is because the loan officer did not properly quaify borrowers or because the mortgage processor submits incomplete mortgage documents to the mortgage underwriter. Incomplete documents submissions to underwriting gets conditioned by the mortgage underwriter which adds delays to home loan closings.
Nobody likes delays in home loan closings, whether you are a purchaser or a refinance borrower. The key to avoiding delays in closings is to complete mortgage applications as accurately as possible and provide lenders with all the documents they request. This article will discuss delays in closings and ways to close 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 must 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. We 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 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 of the outcome. This, too, can cause delays in closing.
Recent Late Payments Can Be Delays In Home Loan Closings
Never be late on a monthly payment, whether a credit card or installment loan payment. Being late on a payment will drop credit scores. Will cause delays in home loan closings. Late monthly payments can 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 is lower than anticipated. When the home appraises lower than the purchase price, the borrower’s loan officer can contest the appraisal. This will 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. Large deposits or large bank account withdrawals will cause delays in home loan closings.
Any out-of-the-ordinary deposits or withdrawals greater than $200.00 need 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 not to be late on monthly payments.
They should not open new credit and not make any large purchases. They cannot purchase high-ticket items, monitor their bank accounts, and religiously pay their monthly debt obligations on time. Many borrowers get excited about buying a new home when they get new furniture and 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.
