This post is for both buyers and sellers, as both sides lose when a deal evaporates. And, when it blows up just a week or so before closing because of denial of the mortgage loan, it's even more damaging. Without placing blame, let's see how a deal can get that close to the closing table and the mortgage not be approved:
- Buyer is slow in deciding on a lender or in providing required documentation
- Buyer is shopping rates and playing one lender off of another, taking too much time
- Appraisal, survey or other process delays
- Re-appraisal or other value follow-up by the lender
- Inspection/condition issues and repair negotiations
- Buyer changes spending habits or makes major credit purchases during the process
- Real estate agent(s) are not keeping up with process and keeping it on track as best they can
Again, this isn't placing blame, but you can see that there are a number of things that can stretch out the time line for the mortgage approval. If you're the buyer, take an active roll, keep up with communications, with your agent and the lender. It's your loan and future home, so don't hesitate to make regular contact and keep things moving. If you're the seller, you're out of the loop a lot, but it doesn't mean you should be un-informed. Many times, the best way to do this is through your listing real estate agent. The communication between the agents, if constructive, can ease your concerns.
One thing that can help a lot is to not set unrealistic closing dates in the negotiation. Also, as a buyer, be careful about an interest rate lock too early in the process and too close to the scheduled closing date. Things happen, and you don't want both sides losing because of poor planning or follow-up.