Can my mortgage be denied after underwriting and commitment?

Question

My husband and I are purchasing a new construction. As a part of the contract, we were required to submit a pre-approval letter at the time we signed the contract. We also were required to submit a loan commitment letter within 30 days of the contract date, which we fulfilled.

My mortgage broker said the commitment process is like going to close. We plan to close in about 30 days or so. Is it possible for our loan to be denied at the last minute even though we have a commitment letter? This is our first mortgage and we appreciate any information or help that could relieve our worries. Thanks!

Answer 1

Actually, it can be denied...unfortunately. Basically, it can be denied up to three days after you sign the closing papers, especially if you are going directly to a bank. The bank can make up any kind of excuse to turn it down. Your best protection is to make sure you applied with a mortgage broker (someone who deals with lots of lending companies), because if the loan gets dropped last minute, the broker can slide your application into another lender asap. It may take a week or two longer to close, but at least it can still get funded.

If this does happen to you, just make sure you look at the terms closely when you sign. Loans often get changed last minute.

Hope this helps.

Answer 2

Pre approvals and commitment letters are not worth the paper they are printed on generally speaking. They always contain verbage stating the outstanding conditions and should any of those conditions not be met to the satisfaction of the underwriter- the file can be denied.
The clear to close the others have mentioned is the thing you want to ask about. Until you have met all the outstanding conditions on your loan- that CTC is not issued. Call your loan officer and simply ask them "Do we have a clear to close on our loan?" If the answer is anything but yes, ask exactly what is needed in order to get that CTC and quickly provide what they need.
You might want to go over the terms of the loan again with the loan officer to make sure it is the same as when you started as things can change- rate, term, loan product, etc. Go over the details with them now so you don't have any surprises at the closing table when you feel like you are obligated to sign the paperwork even though it is not what you originally wanted.
Good luck to you and congratulations on your first home!

Answer 3

Mortgage Commitment Letter

Answer 4

It sounds as if you don't have any confidence or trust in your mortgage broker. I would call and ask them point blank if there are any issues. You can also ask them specifically what else needs to be done and what status the lender has assigned to the loan. Above was mentioned clear to close. Mainly an inside the ropes term, but basically the big green light mortgage brokers are working to get. If you have that, bar any major changes to your personal situation, you should be ok.

As my Broker/Owner/Realtor friend likes to say, you can count on the loan being ok only after you have moved in to house :)

Answer 5

1st - CONGRATULATIONS = )
2nd- Unfortunalty, even if the underwriter gives the files a clc (clear to close), they can still deny it, but it better be for a gooood reason. Otherwise, if you have reserves, good credit, appraisal is ok, I dont see why you should have a problem.
I recommend to call your loan officer or broker and ask for an update on the file since its still a month to go.
I had 1 file denied at settlement, but remember, if everything looks good at your end, dont worry!
Wish you the best and hope evrything goes well = )

Answer 6

If you both lost your jobs the day before closing, yes, you could be declined. Or if you go buy yourself an Escalade and screw up your debt ratios, that'd be another way to lose your approval.

But if you have a good broker, your commitment letter should have real meaning.

If you've already provided all your income and asset documents, they've run your credit, etc..., you should be just fine.

Answer 7

You actually CAN be denied at the very last moment, but only if you pull something stupid like suddenly running up your credit card debt about $10,000 (maybe to buy new furniture for that house). Additionally, were there to be a substantial negative change to your income due to a job loss, the same would apply.

Generally speaking however, if nothing of substance changes on your credit report and verified incomes after you receive a commitment, you should be fine. Just staple your credit cards to the floor and don't remove them until AFTER you close.

Enjoy the new digs !

Answer 8

you will desire to pay the judgment now....or you will close after 12/15 your DTI may be an argument as maximum creditors who do handbook underwriter only go as much as 35% back end if the collections are better than 1yr previous they won't would desire to be satisfied yet creditors will take in account if the quantities are over 5k mutually. you will desire to coach with a broking provider additionally as wells fargo only all started doing FHA. A broking provider can discover you different creditors who could be greater lenient in direction of your difficulty. even inspite of the indisputable fact that fha has no score requirement....a great form of creditors do impose credit standards....maximum of them dont do below 550.

Answer 9

You should be good to go if you have a commitment letter and a Clear to Close

Answer 10

what ERICA & ACER say are correct...but also keep this in mind....this is why closings are soooo stressful!..people stress over evry little minute of closing.....
take a deep breath (have a glass of wine)...chances are you'll be ok...but if something happens you can always rectify and restart the escrow/closing process.

good luck