You’ve put in countless hours of research, shopping around and preparing documents only to learn that your loan isn’t going to close.
As a real estate investor, the last thing you want is for your mortgage loan to fall through. Knowing the most common reasons some loans don’t close is the first step in making sure yours does.
Let’s take a look at what real estate investors need to know in order to make sure their loan closes without a hitch.
The top 5 most common reasons for mortgage loans falling through are: insufficient funds, credit score problems, income verification issues, appraisal issues and title issues. Let’s go into detail on each of these:
INSUFFICIENT FUNDS
This can mean one of two things: either there aren’t enough funds available for closing costs or down payment requirements weren’t met. It’s important as an investor to make sure you have enough cash on hand for closing costs or any unexpected fees that may come up during the process. Additionally, if your lender requires a down payment and it isn’t met, then the loan won’t close either.
CREDIT SCORE PROBLEMS
Your credit history must meet certain criteria when applying for a mortgage loan. If it doesn’t meet those criteria, then chances are your loan will be denied. To avoid this issue make sure all of your bills are paid on time and that no negative items appear on your credit report prior to applying for the loan.
INCOME VERIFICATION ISSUES
Another reason why loans don’t close is due to income verification issues. Lenders want proof that you can afford the payments associated with the loan amount requested, so they require documentation such as pay stubs or bank statements showing steady income over at least 2 years prior to the application date. If these documents cannot be provided, then the lender may not approve your loan request or may require additional documentation from other sources such as tax returns or W-2 forms before granting approval.
APPRAISAL ISSUES
A home appraisal is an important part of getting a mortgage because it tells lenders how much money they can lend based on its value. If an appraised value comes back lower than what was expected then lenders may not approve the loan because they don’t feel secure about lending more money than what could be recouped in case of default on payment terms by borrower(s). This is why it’s important as an investor to do your research ahead of time and understand what type of market prices should be expected within the area where you’re investing so there are no surprises during appraisal process.
TITLE ISSUES
Title issues occur when there are discrepancies between what appears on public records (such as deeds, mortgages etc.) and what appears in title searches conducted by lenders during pre-approval process of mortgage loans; this includes missing paperwork or incorrect paperwork filed with county courthouse related to property ownership rights/liens etc.. In order to avoid this issue make sure all documents pertaining to property ownership/liens etc.. have been properly filled out and filed before applying for mortgage loan so there are no surprises later down the road!
Knowing why mortgages don’t close is essential knowledge for any real estate investor looking to get approved for their loan quickly and efficiently. By understanding common pitfalls like insufficient funds, credit score problems, income verification issues, appraisal discrepancies, and title issues—real estate investors can increase their odds of having their mortgage loan approved without interruption or delay! With this knowledge in hand—you will be ready to make offers with confidence knowing that you understand potential roadblocks before even submitting an offer!
