Common Delays Found in Mortgage Loan Application Process

Borrowers can often be surprised at the amount of time it takes to obtain a loan approval.  Often the delays lead to frustrated borrowers who vent their anger on the lender or bank handling the loan application.  There can be many reasons for a delay in the loan approval process, some caused by the borrower, some caused by the lender and some that are processes with the fault of neither borrower nor lender. 

Using the mortgage calculators to determine mortgage qualifications and the income and debt payments associated with an individuals application should be the first step before filling out the mortgage application.  The mortgage calculators will help to not only determine the applicant’s debt ratios but assure the borrower has reviewed their own financial position.  After a borrower has reviewed their financial situation, hopefully with the thorough use of a mortgage calculator, filled out the application and submitted the supporting documents to the bank or lender the loan processing and underwriting phase begins.

During the processing and underwriting phase all of the information on the application is verified.  The income is verified and calculated, the debts are checked, credit is verified and assets are verified.  It is this process that causes most of the delays.  The most common delay issues in the loan approval process include the following:

The loan application is incomplete; examples may be the employment history is filled in with less than a two year history.

Application does not disclose all of the borrowers’ debts.

The underwriter or processor is having difficulty verifying income.

Additional derogatory credit is discovered in the credit profile.

Appraisal on the property is delayed.

Appraisal on the property has problems with technical issues such as comparable sales.

Income is verified less than reported by the applicants.

Creditors or employers are slow to respond to requests of the processor or underwriter.

The title search on the property is delayed or the search yields liens filed against the property that were not previously known.

There are certain safeguards a borrower can follow to expedite the loan approval process.  The most important acts for the borrower include:

Read all of the documents you are given, make sure you understand all the terms and sign those that have to be returned expeditiously.

Check with the lender about the documentation you’ll need to complete the application.  When you go in to fill out the application, you’ll need a number of items and information.  These will most likely include w-2’s and paycheck stubs for  proof of income, the property or address of the home you want to buy, recent bank statements and identification for the borrowers.  These are some of the common items, check with the lender for a list of specific items they may need to complete the application and loan request.

When you fill out the application, be straightforward and accurate.  Tell the lender about the good credit and the bad credit, how much money is available for down payment and closing, and other pertinent data that is on the application.  All borrowers should be honest and straight forward regarding their debt history, income, job time and financial assets.
 
Know your rights as a borrower.  There are numerous Federal regulations that protect the borrower such as the Truth in Lending Act, the Fair Credit Reporting Act, Equal Credit Opportunity Act and more that ensures that you as the borrower are protected.

Engage the mortgage payment calculator and mortgage qualification calculator to calculate your qualification levels and be informed should the mortgage lender question the values pertaining to these figures.

Be patient and be in touch with the mortgage lender handling the loan request.

Tags: mortgage, mortgage application, mortgage calculator, mortgage lender, mortgage payment calculator, mortgage qualification calculator

This entry was posted on Saturday, March 21st, 2009 at 10:00 am and is filed under Mortgage Basics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.