Buying, Finance

Five Prior to Funding Conditions That Can Delay Your Closing

Prior-to-Funding conditions normally come up when an underwriter reviews the file just before funding the loan. The conditions could vary from simply being verification of employment, a letter of explanation of recent credit inquiries or adequate insurance coverage for your home. These conditions could potentially delay your closing even though your lender has provided a Mortgage Approval Letter. Below are 5 Prior-to-Funding conditions you should be aware of:

Employment Verification

In the process of underwriting your file, the lender will verify if you are still employed in the position that is stated on your loan application, and they will do this more than once in the process. If there are any changes or going to be any changes soon to your employment, make sure to inform your Loan Officer well in advance.

Credit Inquires

Any recent inquires on your credit report, may be checked by the lender to see if any new credit has been extended that is not yet appearing on your credit report. An inquiry could range from anything minor like a new cell phone or it could be a major one that may impact your ability to qualify for the loan. It is suggested not to make any new purchase during the loan process.

Five-Prior-To-Funding-Conditions-That-Can-Delay-Your-Closing

Funds for Closing

Lenders will want details of every dollar that is coming to the closing table and verify that it has been deposited into your bank account. If you need funds from a retirement account or home equity line then it might help to start the process sooner rather than later. Sometimes banks do not release all of the funds immediately after a large deposit so it is important to have these in place well ahead of your closing date. Also, make sure to keep a paper trail of all money deposits and wire transfers.

Title and Judgment Searches

Title and judgment searches could potentially reveal judgments against your name or the sellers, along with liens against the property you are buying or selling. Sometimes, even an old mortgage could appear against the property since it was never properly discharged, or if you have a common name, items could appear that are really not yours. The underwriter and title company will want these cleared up before the closing.

Homeowners and Flood Insurance Coverage

Lenders typically want to review your coverage policy several days prior to closing to make sure that the coverage is sufficient. They will also want to accurately account for it in your monthly payment. Make sure to understand the lender’s coverage requirements when shopping for your home and/or your flood insurance policy.

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Amazon.com Best-selling author, Shashank Shekhar (NMLS 8176) is a mortgage lender with Arcus Lending, offering loans for home purchase and refinance. Shashank has been featured as a mortgage expert on Yahoo! News, ABC, CBS, NBC and FOX. He has been named "Top 40 under 40" most influential mortgage professionals in the country.