12 Common Reasons For Delays in the Mortgage Process

The day comes when you find your dream home! Anxious to close and move in, you suddenly find out that the closing has been delayed.

The period of time between accepted contract to closing is filled with a number of steps required to finalize your mortgage. During this period of time, every minute counts.  The slightest of missteps can have a snowball affect and begin to create delay upon delay.

What are the most common delays and how can you avoid or prevent these situations from arising?

1. Employment Info and History—Lenders will want to see two years of employment history to demonstrate your stability of income. Additionally, they will focus on the base pay as this is traditionally more consistent.  Tips or commissions typically vary and can not always be relied upon. Be sure to not over-inflate your income during initial discussions with lenders. Once you provide them with required documents they will see the whole picture. 

2. Credit History—Be prepared and get a copy of your credit history. Review the report to look for discrepancies and dispute any red flags you may find. 

Some of these disputes may take some time to clear up, however, the extra time spent on this issues ahead of time will save unnecessary time and stress later, when time if precious.

3. Slow to submit requested documents to lender—In order to begin the loan application process the lender will need documents such as pay stubs, tax returns, drivers license, etc.  When buyers delay getting these to the lender the file sits on their desk until complete.  Gathering these documents prior to finding that dream home and having them ready to submit can give you a jump start on the process.

4. Not signing e-consent forms upfront—Be sure to provide the necessary authorizations to allow the lender to secure needed information.

5. Delay in signing the initial loan disclosures—Lenders are required by federal law to provide a number of disclosures to prospective borrowers.  The purpose of these documents is to clearly explain the various charges and loan terms to borrowers.  Your signature is required to verify that you have received these disclosures.

6. Processing and underwriting not done in-house—Many lenders do not complete the underwriting process in house. When this is the case the mortgage officer begins to lose track and control of the file.  When shopping for possible lenders, be sure to ask upfront how they handle underwriting.

7. Not quickly doing a home inspection—It is in the buyer’s best interest to have the home inspection process completed prior to ordering the appraisal. However, when the home inspection is not completed promptly it extends the appraisal process. Often, the appraisal process can take a week or more.  Once you have an accepted contract, the first call you should make is to schedule the home inspection.

8. Delay in ordering appraisal—When buyers hesitate in beginning the loan application process, this will create a setback in getting an appraisal ordered as well.

9. Buying stuff on credit or opening up new credit—Buyers get excited about getting new furniture, washers and dryers for their new home. 

The “same as cash” deals they sign up for can create a stumbling block when the lender pulls a credit report and they see this new activity. This changes a buyer’s credit report and perhaps credit score.

10. Cash deposits into bank account—Cash is difficult to verify its source. You will need to provide evidence of source to the lender. Avoid cash deposits and large deposits, as explained in #9, and prevent this issue from arising.

11. Large deposits into bank account—Lenders will require you to explain and provide a copy of the check to verify the source. If you need to request a copy of the check from the bank that could create an unnecessary delay.  

12. Expired drivers license or ID—Many states are moving towards mailing licenses to recipients and can take up to two weeks to receive from time of request. Be sure to check your license or ID early in the process and be sure you do not run the risk of approaching its expiration date. 

The numerous steps required in the mortgage process can be overwhelming and create more stress than necessary.  Being proactive can prevent much of this heartache and get you to closing date sooner.