Home Buying in 77469>Question Details

Maria, Home Buyer in Richmond, TX

Mortgage company denied my loan 1 day before closing

Asked by Maria, Richmond, TX Tue Nov 25, 2008

I am a first time home buyer. After looking for a new house to buy, I looked for a mortgage company that can offer me low interest rate. I went with the the builders mortgage company, they preapproved my loan of $240,000.They have set my closing date, I thought everything is going well, I got a call 1 day before my closing date and mortgage company denied my loan. THey said they can only approve me of a $190,000 loan because of my DTI. Are they suppose to know that before they preapproved me of $240,000 since they already have my financial info? I am just confused.

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Maria, unfortunately, final approval is sometimes delayed until the very last minute. You say that you used the builder's mortage company; did you also use his real estate agent, or did you have your own Buyer's Agent? If you have your own agent, which I'm hoping you did, just ask them to call one of their connections and see if they can have another mortgage lender attend to you. They should also be able to push back closing if necessary.

If you did not use a buyer's agent and you negotiated directly with the builder or their representative, you will need to read the fine print in the contract you signed. There should have been a financial contingency addendum. The verbiage within this addendum will declare what happens if you, the buyer, is financially unable to perform. Hopefully, it says that you can walk away without losing your Earnest Money Deposit. If the contract was written by the builder's attorneys, it may not be favorable to you. However, if the builder is a reasonable person, try talking to him/her about the situation. That is, provided you still want to do business with this person. If he is an honorable person, he will probably let you walk away with your Earnest Money Deposit or, perhaps, find a way to get you into the house you want.

Another thing that you can do is to go to a local mortgage lender and ask them if they will give you a Good Faith Estimate. This document will tell you the amount of mortgage that they would approve for you. A local lender might be the bank you do business with, your credit union, or another local bank that has a good reputation in your community.

If this deal falls through, please find a Realtor to represent you as your Buyer's Agent before you start house hunting again. The agent will help you find a good lender first. Then the agent will show you the different choices available in houses that meet your lifestyle, location, and financial criteria. There are many resale and new houses for sale right now and one of them will be right for you. Your agent can help you weigh the pros and cons of each house so that you choose wisely before writing a contract.

Please let me know how this turns out for you. I can feel your disappointment.
Best Wishes, Maria Morton
Web Reference: http://www.MariaSellsKC.com
1 vote Thank Flag Link Tue Nov 25, 2008
0 votes Thank Flag Link Sat Apr 23, 2011
wells fargo duluth,mn called me 4 hours before closing on a house to let me know i needed 6% down.. I just figured the bank wanted to buy it more than i did. Hows that for a breach of contract?
0 votes Thank Flag Link Sat Apr 23, 2011
WOW sorry to hear this, I am a Dallas realtor and Dallas loan officer in some instances lending changes daily it difficult you are not the 1st this has ever happened too.

If you are approved for $190K loan happy to assist you, perhaps locating a home with equity to your benefit or another location. Never work with a builder, seller, listing agent direct unless you have our own realtor.

Contact my office if I can assist
972-699-9111
Lynn

http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Dec 1, 2008
Maria,

I am sorry for the problem. This is unprofessional at best. I think a good loan officer should have a good idea of if you are going to get approved or not when they take your application. There are differences though. Some are order takers and some are experts. The experts will give you a good idea if you are good, close, iffy, or there's no way you will get a loan. You could try another lender, but I wouldn't expect a $50,000 difference. You could do a couple of things. See if the builder can discount the house. $50,000 is a lot, but maybe they can to get rid of it. Maybe they could give you a deal on another house. Maybe you could put more down payment.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Nov 26, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Will the builder lower the price so you can buy it? After all, its THEIR mortgage company.
0 votes Thank Flag Link Wed Nov 26, 2008
Unfortunately, there are many unprofessional loan oficers out there.... most of them work for builder's mortgage companies.
You can get a second opinion, but don't expect the results to be too much different, but you never know
0 votes Thank Flag Link Wed Nov 26, 2008
As a Professional Mortgage Planner we are obligated to do just that.... plan and anticipate the requirements, conditions and stipulations for closing that will come from the underwriter. This is learned ablity that comes from review of many files
and having satisfied many conditions over years.
In some cases the process of clearing one condition my create several other conditions, however the seasoned Planner will anticipate this too and is prepared to satisfy those conditions as well.

There should be no way to have a $50,000 descrepancy in purchasing ability when your loan officer had "all" required financial documentation well before closing. This should have been determined well before that DEAD LINE>

Please review my profile and if I can be of any assistance to you regaining the purchase of home please email me. With compenstating factors the higher ratios can be mitigated where with a "manual" underwrite you can be approved.
0 votes Thank Flag Link Tue Nov 25, 2008
Thank you for your prompt replies to my query.
I negotiated directly with the builder's representative and used the buiders mortgate loan. During the approval process, I did not open any credit line and my credit history is great, . I will even put on a 10% down.The loan officer that I have dealt with calculated my income and will be able to pay off the loan
It is just frustrating that they have to informed me about my loan being denied 1 day before closing date.
Is there any possibility that I can be approved with my original loan with another lender?

Thank you again
0 votes Thank Flag Link Tue Nov 25, 2008
Good evening Maria,

Ouch! I'm so sorry this has happened to you. According to what you wrote; it sounds like the typical "pre-approval" that some lenders do up front. That usually just includes looking at your credit and taking a snapshot of your income/expenses and assets. Once you are under contract, then that's when they really start turning over all those "financial rocks" for all the information the underwriter will need. That sounds like exactly what happened in your case. Like Naima said, it may be a blessing in disguise as you obviously didn't need to be stuck in mortgage payments that were going to be too high for you.

If you have a Realtor working with you, you may want to consult him/her on how to get the builder to work with you on your new price approval and still get the home. You never know. Best of luck on your endeavors.

God bless,
Josh
Web Reference: http://www.eXposedHomes.com
0 votes Thank Flag Link Tue Nov 25, 2008
Did you apply for new credit cards, open a new credit line, or make a large purchase on credit prior to closing?
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Tue Nov 25, 2008
Cindi Hagley, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Maria,

I am sorry for the bad news but it could be a blessing in disguise. It's best that you know that now instead of being faced with a monthly mortgage payment that you can't afford.

Yes they should have had at least a doubt if they ran it through the DU. Hopefully you haven't incurred any expenses that you can't recoupe. Go back to the builder and see if they have a home that you like in the 190K range.

Also, did you have a Realtor represent you in your purchase?

Naima
214-289-8555
naima@sumner-realty.com
Web Reference: http://www.sumnerrealty.com
0 votes Thank Flag Link Tue Nov 25, 2008
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