Challenges to be aware of in today's lending environment | Real Estate
There seems to be a fear out there that banks are not lending money. This is absolutely not true. If you do decide to either purchase or refinance a home there are some items that are helpful to know prior to beginning this process. This article is intended to educate you about some of these complexities. There are always issues that could arise but having knowledge of the following items could allow you to alleviate some of the potential issues or at least educate you about what could happen.
This issue would only be applicable if you are purchasing a home or putting money down for a refinance. Depending on the type of loan you are applying for the lender can ask for up to 60 days worth of account statements from the account you will use for funds at closing. They now require borrowers to show proof of any type of non sourced deposits to the account being used for down payment. They will not question direct deposits from your employer but any other deposits generally speaking over $100 will require additional documentation.
Once the process has began and all required documents have been sent to the underwriter, at that point the file should receive an initial approval. At that point the lender could require us to obtain a few documents from one or all of the following people involved in the transaction: you, your real estate agent (purchase), insurance agent, the appraisal management company or the attorney. There is a possibility that once the lender receives the items they requested at the point of initial approval there is a chance the file could be re-conditioned.
This could happen for 1 of 2 reasons. The first one is the items we sent them could spur on additional questions and the second is the possibility that the underwriter missed something the first time.
Be aware that after your initial approval and prior to closing the lender is now required to re-pull the credit. If there are any drastic changes in your report this could cause you to not qualify for the loan. The following are a few items to review to insure we are able to maintain your approval:
- Don’t apply for new credit of any kind
- Don’t pay off collections or charge offs
- Don’t max out or over charge your credit card accounts
- Don’t consolidate your debt onto 1 or 2 credit cards
- Don’t close any credit card accounts
- Don’t pay late
- Don’t allow any accounts to run past-due… even 1 day
- Don’t dispute anything on your credit report.
In addition any items that have already been disputed on your credit will need to have the dispute verbiage removed
With the new Home Valuation Code of Conduct appraisal system lenders have no way of assuring value. We have no control over this. Also even after the appraisal has been completed the lender will do a desktop review and this also could cause an issue with value. With an FHA deal more than a conventional deal there is a possibility that the appraisal could come back “subject to.” In this case work is required on the home and a final appraisal inspection will be required.
This article is not intended to scare you away from refinancing or purchasing but more as an educational piece. Being educated about the process and having a good lender on your side will help you have the smoothest process possible.