Bank cancels mortgage before the closing! This a common occurrence contrary to popular belief. Sometimes there is a fixable solution and at times there isn’t so buyer beware of how you handle your money until the ink dries on the closing papers. Yes, you heard me right until you get to that closing proceed with caution financially.
- Just because you are pre-approved is not a guarantee you will get the funds the lender quoted in the pre-approval letter.
- Just because you signed your contract and put down a deposit doesn’t guarantee you will get the funds the lender quoted in the pre-approval letter.
- Just because the appraisal and home inspection was completed doesn’t guarantee you’re clear to get your funds from the lender.
- Just because you received your commitment letter does not mean the lender will fund the mortgage.
Reasons Bank Cancels Mortgage
- You went on a spending spree and charged up your credit card for that new furniture, washer & dryer, new bed or down payment to the contractor for renovations etc. It does not matter what the reason for spending the large amount on your credit card for that new house, the lender sees that big chunk of change as a liability so do not spend it until you’ve closed. Not fixable so put all large purchases off until after the closing.
- A great deal was offered on a new credit card you decided you’ll need for the new house since it’s zero percent interest for 12 months. Guess what the lender suddenly cancels your mortgage since they see your gaining this credit card as a liability to pay them back. Not fixable so get the credit card after you close on the house.
- You made your standard charges on your current credit card but you forgot to pay the monthly payment and you got charged a late fee. Fixable if the lender will simply ask you to pay off the balance on the card. But to avoid this simply put your credit cards on auto bill pay above the minimum payment. Should you be the type of person who pays off the balance each month just schedule another payment minus the auto pay amount. Things get hectic and people forget the simplest things during this period in their life.
- Sometime the lender requires a permit for an additional room. If one does not exist the scramble to get one starts and depending upon the time frame to get one, lender may cancel your mortgage. Fixable since the permit can be acquired the question is the time frame.
- The mortgage insurance company declines the loan. Fixable by getting another company to approve it. This can happen since everyone has different criteria to interpret credit and income.
- Lenders are very thorough when clearing you for a mortgage so any false documentation will get your mortgage canceled. So do not under any circumstances submit any false information to the lender. Even concerning tax returns the 4506-T form will verify the tax returns you submitted are true to form. False documentation is not fixable.
- You’re changing jobs isn’t a smart idea even if it’s for better pay. This isn’t fixable until you are at least six months (depending upon the lender) on the new job so keep your job change under wraps even with your soon to be old boss. Trust no one but you to keep this transition under wraps and make the transition after the closing.
Did You Know
- Lender runs a credit report up to the day of closing so it best to not change anything that will surface on there.
- Lenders are not emotional about their lending practices so your sob story won’t stop anything.
- All situations mentioned above apply to every type of home (apartment, townhouse, building etc.) you may consider purchasing.