With Halloween coming up, we thought sharing some mortgage horror stories would be a great way to set the mood.
Appraisal Inspection Lost
A borrower who applied for a mortgage and had an incredibly strong mortgage approval in place. In fact, this borrower’s credit profile was so strong and the property had such a low loan-to-value ratio that we did not need an appraisal report to close.
As the loan closing drew near, the borrower decided to change some of the terms of the purchase contract without consulting the lender and this resulted in a scenario where the appraisal waiver was lost despite the fact the borrower was getting a better deal.
The loan had to re-enter the loan underwriting process and despite the fact the loan was still strong, the appraisal waiver was removed and the borrower needed to order and pay for an appraisal inspection.
Jump in Interest Rates
We had pre-approved a homebuyer but they decided to put their property search on hold after not finding anything that was of interest. A year later this client resurfaced with an accepted purchase contract in hand but with no prior communication. Interest rates changed so drastically during this time, that they no longer qualified for that purchase price and they were not aware as they had not consulted their lender to update their pre-approval.
Gift Funds Gone
We had a pre-approved borrower who was supposed to receive a gifted down payment by one of their family members so they could purchase their first home. Everything was on track with their loan closing process until the time to wire this money came about. It turned out that this family member and the borrower had a personal disagreement a few days earlier and was no longer willing to give them the down payment. Not only did this borrower lose the house but their earnest money deposit was put into jeopardy.
Verification of Employment
A borrower was in escrow to purchase a home after relocating. The client assured their Mortgage Loan Originator that their employer knew about the relocation and could work remotely. Towards the closing of their loan process, when the mortgage lender proceeded to complete a verification of employment with the client’s employer they were taken aback and had no idea the client had moved. This resulted in not only the escrow being canceled but also the client’s employment being put into question as most employers have strict policies about relocation notifications.
Costly Mistake
We had a borrower who reached out to us a few months ago interested in refinancing after they had closed on the purchase of their home with a different mortgage company to explore refinancing.
Upon further discovery, it turned out that this borrower paid 2% of the loan amount to the previous mortgage lender in loan fees in order to obtain their financing when purchasing this property.
A few months later interest rates had improved and were considerably lower and the borrower was able to refinance with Bluefire Mortgage Group at a lower rate and with no points. This meant that the 2% paid on the purchase was wasted.
These mortgage horror stories do not need to be your experience. Preparation and communication are the foundation of a successful mortgage loan closing. Our office is available to help answer any mortgage-related questions and we can be reached at (760) 930-0569.