Why some deals die a quick death on the closing table
Most lenders got burned badly during the housing crisis that started in 2007.
Some of it was self inflicted due to the lax lending standards, like stated income loans that I talked about last week. This led the industry to make massive changes over the last decade which made it more difficult to get a home loan.
The days of “no doc” loans are long gone and it seems that the pendulum has swung to the opposite end. Borrowers need to prove where money is coming in and going out down to the last dollar.
If Granny recently sent you a check for your birthday, they will likely want to see a copy of it. This sounds funny, but I am not kidding. If you ask anyone who has taken a mortgage lately and they feel like they have been through the wringer.
In addition to the increased documentation load, there is more going on behind the scenes that you never see with verification.
Most people think that once the initial credit report and employment verification are completed, then that part is done.
That’s the kind of thinking that can get you in big trouble.
Most lenders order another credit report and employment verification just before closing. Sometimes on the day of closing.
And if you make another big purchase during the loan approval process, it can cause you not to qualify for the home loan.
You might be thinking, why would I buy anything else at this time?
It happens because people get excited about their new purchase. They want new furniture to go in the new home. Or they want a boat to go with the new lake home they just purchased. Or they decide that they want to get engaged and they buy a big, fat diamond on credit.
That last one happened to a guy in Nashville just the other day. He had to return the ring in order to close on his home.
So, if you would like to avoid having new furniture and no where to put it, then let me show you how to safely walk the narrow path to the closing table.
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