The Home InspectionIt is not a common issue, but there are times when the borrower may decide to back out of the deal based on something that was found during the inspection. The downside is that there is not much your lender or real estate agent can do if there is an unfixable problem with the property. The best way to try and avoid this situation is to ask the seller many questions in the beginning stages to ensure that everything is disclosed as early as possible. Many times, these issues could have been discovered early on but are not, due to any number of miscommunications.
The Appraisal ValuationIf the home is appraised higher or lower than the valuation in the initial offer, this can be another challenge that may come up. However, this is less common in popular markets, and it typically only comes up when there are not comparable sales. Working with a good real estate agent can help deter these issues early in the process.
The Application IssueWhile some loan closings are prevented due to the actual property, more often than not the issue arises from the loan application. Sometimes the documentation does not match the information provided on the original application. One common error on the application is the amount of qualified income of a self-employed borrower. The income listed on the application needs to match what is listed on the borrower's tax return. Obtaining a pre-approval is a great way to avoid some of the application issues that could arise later in the game. You can visit our website (www.YourLakeLoan.com) to fill out your application and get started on this process!
The Borrower’s CreditThe underwriting process relies on the borrower's credit, and this can play a role in common home purchasing challenges. If the borrower has a bad track record for repaying money loaned, the underwriting will unearth this and affect the loan process. Another thing is if the borrower has too much debt relative to their income, problems will arise during the underwriting process. The debt-to-income ratio is one of the most important factors in mortgage underwriting. If you have considered purchasing a home at the Lake of the Ozarks, now is the perfect time to take a look at your credit and make sure it is in order so that you can avoid potential challenges later.
Just Bad TimingMortgage loan closings can also fail due to timing issues caused by last-minute changes. These seemingly simple changes could require the lender to issue a new disclosure statement, therefore delaying the closing. If the seller included a contingency that the closing must occur by a specific date, such delays can be problematic for both the buyer and the seller. Another timing issue can occur when the borrower does something to alter his or her financial standing. Buyers should avoid making any other large purchases or switching jobs during the loan process.
As with any big life change or major decision, there will always be situations that could arise through the process. The good thing to remember though is that with a good team on your side, you can work through the challenges and before long, own the home of your dreams. One of the easiest ways to avoid challenges during your home purchase is to disclose as much information as you can from the beginning, even if you think it may not be necessary - we can use that information to create the best plan for you. Also, remember to keep your team updated with any changes during the process that could affect your loan.
Be sure to ask your Lake of the Ozarks mortgage lender and your real estate agent as many questions during the beginning of the process and make sure to get a pre-approval before moving ahead with an offer on a house. If you are considering purchasing a home at the Lake of the Ozarks soon, give me a call at 573-746-7211.
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Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.