Reasons why Mortgage Loans Do Not Close

Home Loan Closing

Why Mortgage Loans Do Not Close

The majority of mortgage loans close on time once a loan borrower is pre-approved.

However, there are cases where why mortgage loans do not close on time or why mortgage loans do not close at all.  The main reason why mortgage loans do not close is because the appraisal value comes in too low.  On purchase mortgage loans, the sellers drop the selling price when the appraisal comes in lower than the selling contract price.  However, on refinance mortgage loans, a low appraisal could not make the refinance possible unless the homeowner orders a new appraisal or contests the value of the appraisal.

Home Values When Refinancing is one reason why mortgage loans do not close

When you list the value of your home on a refinance, make sure that you do your homework and find comparables. Go to the various websites like Zillow.com and Redfin.com where you can enter your property address and get a tentative value. Also check the public records and see what comparable homes like yours have sold for. Look on the multiple listing services and see what properties like yours is going for. If you do these basic comparable research, you will be armed with all the tools you need to contest your appraisal if it comes back lower than the value you think it merits.

Credit History is a Huge Factor to Consider

Another reason why mortgage loans do not close after you have been pre-approved is if there are too many credit inquiries or a larger credit balance than the time the lender pulled a credit report on you. You have to realize that mortgage lenders are extremely strict with debt to income ratios and if you were on the borderline on the debt to income ratio guidelines, a larger monthly credit card or installment loan payment can trigger a mortgage denial. Never apply for new credit or purchase large ticket items on your credit card where your balance and monthly credit payment increases.  It is human nature to go and buy furnishings on your new home but please wait until you close on your home.

Changes in Profession Before the Loan is Closed is another reason why mortgage loans do not close

Other reasons why mortgage loans do not close is when a mortgage loan borrower quits their jobs prior to closing the loan.  If you have just quit your job during the mortgage underwriting process, your mortgage loan will not be valid until you get a comparable job.  Even if you get a comparable job in your field, the mortgage loan borrower needs to provide the mortgage lender pay check stubs for the previous 30 days.

Late Payments: A Red Flag for Disqualification

Another reason why mortgage loans do not close is if you have a late payment on your credit report.  A late payment on your credit report will drop your credit scores by at least 30 points or more.  This would definitely disqualify you from closing on your mortgage loan.

Recent overdrafts is another reason why mortgage loans do not close

 

Other reasons why mortgage loans do not close is if you have bounced checks on your banking statement.  A mortgage lender can request updated bank statements prior to closing your mortgage loan and if they encounter that you had a bounced check, they will more thank likely disqualify you from closing your mortgage loan.

Factors why mortgage loans do not close

Just because you got approved on a mortgage loan does not guarantee that you will close on your loan.  A mortgage loan borrower needs to take extra precautions from the time they apply for a mortgage loan and the time the mortgage loan will close.

If you have any questions why mortgage loans do not close please contact me at 262-716-8151 or email me at gcho@gustancho.com or visit us www.gustancho.com .

Gustan Cho, NMLS ID 873293

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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