Now that the market is back in full swing, we are encountering problems with loans that can be easily avoided. Here is what I have been seeing:
Power of Attorney: Only a spouse that is a borrower or co borrower can sign for the other spouse and the POA must be approved by the lender PRIOR to scheduling a closing. An attorney, the title company closer, a parent, or other relative cannot be the POA for a borrower.
Water: The water and electric must be on at time of appraisal or else the appraiser will put it on his appraisal and charge to go back out. If your home is vacant and the water is off, you must go out and turn it on for the appraiser. They will not turn it on.
Funds for Closing: These funds must come from a bank account that has been verified by the lender.
Repairs: Generally they must be completed prior to closing and be re inspected.
Home Inspections: Do not give them to the appraiser. If there any issues on it, they will condition for them to be fixed.
Appraisals: Make your deal go smoother. Meet the appraiser at the property and have comps in hand.
Closing Costs: On purchases, they cannot be rolled into the mortgage. In some cases the borrower may select a higher interest rate and receive a credit back from the lender that may pay some or all of their closing costs.
Fixer ups: Lenders do not do those. The house must be habitable. I.e., you should be able to cook dinner, take a shower, and sleep in the house. FHA, VA, USDA require appliances to be in the house and working!
Appraisal Final Inspections: This is for new construction. Once the appraiser inspects the property to see if it is complete, they have 24 hours to turn it in. Then the underwriter can take up to 3 days to review it, so please allow for up to 5 days from final inspection to closing. We cannot hold up a loan if the appraiser states the property is complete. A borrower’s punch list cannot hold up the closing.
Homeowners Insurance: Due to the increasing cost of insurance, lenders now require a quote before they underwrite the file.
HUD’S and Final Figures: These come from the title company after the lender reviews and approves them. They are generally not available till the day before the closing. We give borrowers a realistic Good Faith Estimate of their costs and how much they need at time of application.
HUD Homes: If the borrower is going FHA, they usually do not need a new appraisal. HUD has already done one. You will need to obtain the appraisal from the listing agent.
Credit Reports: One is run at time of application. Lenders have subscribed to a service where they are notified if the borrower’s credit changes during the loan process or they obtain new credit. So we tell the borrower not to buy anything on credit until after they close. Not even a spoon! And lenders cannot give out copies of credit reports. It is against the law. Credit reports are copyright protected by the 3 major bureaus. (sorry I don’t make the laws)
Gift Funds: The big problem here is that we have to verify where the money came from, and that the donor had it to give. So this means Mom and Dad HAVE to supply us with their bank statement showing they had the money to gift. And gift funds must come from a relative or a person who co habitats with the borrower (s). I.e., people in a relationship.
Praying: It helps J
Roommate Paying Rent: Generally we cannot count this as income to help qualify the borrower.