As I mentioned yesterday, there are several issues that have the potential of delaying closing. A home not appraising properly or any repair issues noted on the appraisal report, which then become lender required repairs, may cause a glitch in closing on time. Lender required inspection reports, such as a termite report or a well and septic inspection report, if applicable, also need to be submitted in advance. Any issues identified on any lender required report need to be corrected prior to closing. Other issues that may preclude you from closing on schedule are outlined below:
4. Last Minute Lending or Underwriter Requirements – The lender may require updated pay stubs, bank statements, or other documentation. Be prepared to submit this updated information, just in case it is requested. Once your loan packet has been submitted to the underwriter, the underwriter may request additional documentation to approve your loan. The documentation required can vary, depending on your credit history, loan type, and down payment requirement. Some things that may be needed include a letter of explanation regarding why a collection, judgment, or bankruptcy was on your credit report or a letter to explain any recent credit inquiries on your credit report (you may be unaware of most of these credit pulls). Additional documentation that may be needed include any bank deposits in excess of your normal pay stub. When it comes to getting a loan, think document, document, document! The best way to minimize any of these issues from surfacing is to speak with your loan officer about what is normally required under circumstances such as yours. Also, before any deposits outside of your pay stub are made, ask your loan officer about the acceptable protocol for handling these deposits and make sure you follow it exactly. Overlooking this critical component may cause your loan to be denied. In addition, any job-related expenses noted on your tax return will have to be deducted from your income, which may, in turn, reduce your loan qualifying amount. This issue can be avoided by bringing any job-related expenses on your tax return to your loan officer’s attention, during your initial conversation and meeting. Even better, submit all necessary paperwork to your loan officer, and aim at getting your loan pre-approved, prior to going under contract on a home.
5. Grant Funds – Many grant funds have an expiration date. If you are unable to close prior to your grant funds expiring, then you will need to re-apply for these funds, which may delay closing. Every organization that supplies grant funds functions differently. If any of the closing hurdles mentioned above are postponing your closing, it may be worthwhile to connect with your loan officer to find out if it’s in your best interest to re-apply for the funds while the issue is being remedied. Another consideration with grants is that the funds may not become available as expected or may simply run out. In either scenario, closing may be delayed, sometimes by several weeks, as the lender waits for the grant funds to arrive or searches for another viable loan program.
Tomorrow, I’ll discuss another issue that is well within your control, so stay tuned!