Even if you’re a star candidate for a mortgage, you could run into some hiccups during application. It could be anything from a missing document to an issue with the appraisal. The good news is that a little preparation can help you avoid these mortgage processing problems.
Documenting gifts. If you’re relying on someone – a parent, for instance – gifting you the down payment for your mortgage, it’s important to document everything. Ask your mortgage lender how long the full down payment amount needs to stay in your account before it can be used to complete the mortgage process. You’ll need the person giving the gift to provide a gift letter and, depending on the type of mortgage, bank statements from the donor. Your lender will be able to tell you all the specifics about gifts – just be sure to ask!
Cash reserves. Reserves are the proof that you have the money to make mortgage payments in the immediate aftermath of financial hardship. Typically, you’d need evidence that you have enough money to cover the principal, interest, taxes, and insurance payments. Some loans require reserves, and others do not – your lender will be able to tell you!
Appraisal issues. You can’t get a mortgage for more than the value of the house, so if the appraisal comes back too low, you’ll face some problems. If this happens, you can walk away from the deal, make up the difference between the appraisal and the purchase price in cash, or renegotiate the deal with the seller. Though the seller may not always want to bargain, sometimes they’re in such a hurry to move that they just want to close the deal.
Many other issues can arise during the mortgage process, but the team at Michigan First Mortgage will guide you through all the ups and downs. Give us a call at 877.312.9033 to get the ball rolling!