Delays in mortgage loan closings
Mortgage loan closings often do not happen on time due to many avoidable circumstances. Most mortgage loan closing dates are kept on target, however, delays can occur. To avoid delays in mortgage loan closings, there are steps you can take. A mortgage loan borrower can start by completing the online mortgage application as accurately as possible. You need to realize that all of the information on the mortgage application will be verified and any discrepancies will cause delays in mortgage loan closings. For example, if you state that you make $5,000 per month and have $10,000 in your checking account, those information need to be verified by W-2’s, pay check stubs, and bank statements. If there are any discrepancies, the mortgage underwriter will require a letter of explaination or additional verification which will cause delays and potential delays in mortgage loan closings.
Do not apply for credit; Credit inquiries will need letters of explanations
Do not apply for new credit or maximize your credit cards. Applying for new credit will drop your credit scores and set up a red flag to the underwriter. Every time you apply for new credit, you will have a posted inquiry on your credit report. Each hard pull credit inquiry will drop your credit scores by 2 points normally. Having multiple inquiries on your credit report in a short period of time will alert the underwriter that you are desperate for credit and will scrutinize your file more. Every credit inquiry will need a letter of explanation and will cause a delay in the mortgage underwriting process which can delay mortgage loan closings.
Purchase Of High Ticket Items And New Credit
Do not purchase new items on your credit card because your debt to income ratios will go up. For those who are on the borderline debt to income ratio limits, a charge on your credit card can disqualify you where mortgage loan closings will not be delayed but your mortgage loan application will be denied.
New purchases prior to mortgage loan closings include high ticket purchase items such as furnitures, appliances, and automobiles.
No overdrafts and no late payments
Make sure you do not have any overdrafts during your mortgage loan application process. Most mortgage lenders require no bank overdrafts in the past 12 months. Make sure you have no late payments either in the past 12 months. Most mortgage lenders will disqualify mortgage loan borrowers if they had any lates in the past 12 months, especially mortgage payments. One 30 day late payment can drop your credit scores by 40 points.