There are several things that can happen that may lead to problems with a mortgage at the last minute when a person is trying to purchase real estate. It is important that people who are interested in engaging in a real estate transaction understand the issues that are often at play.
In some cases, people may have loan fee and rate changes to their mortgages while the transaction is pending. Mortgage loan officers should take steps to minimize the risk of this occurring from the outset. Another issue may occur when the appraisal is returned with a higher loan-to-value ratio than was estimated. This can result in increased discount fees and loan rates.
Another problem that occurs is when a mortgage loan is based on a person’s estimate of their credit score rather than on their actual one. If their score is lower, then the interest rate will go up for the approved mortgage. Inflating income or failing to report debt can result in problems as well. Lenders will normally analyze income by comparing what is claimed to the documentation that is provided by the potential borrower. Debts that don’t appear on credit reports should also be disclosed, including for such things as child support and alimony payments. Finally, when there is a change to the money that will have to be provided to close on the property, the mortgage lender will suspend the loan.
When people are seeking mortgages, it is important for them to be honest and fully disclose their income and debts. They should also anticipate and plan for any issues that may potentially arise during the process. People who are interested in purchasing real estate may find it helpful to seek the services of a real estate attorney at the outset of the process.