You did everything right; you got your pre approved home loan settled and out of the way before you started to bother sellers, real estate agents, and lawyers. Everyone knows that you are serious about your home buying exploit, and everyone seems to be on your side, including your lender. Then life happens, as it is wont to do. Your financial situation changes substantially.
You have gone through the requirements for your preapproval with a fine toothed comb, and you realize that any change in your finances could be a problem that starts a chain reaction, ending your dream of home ownership. There are some steps that you can take, and if you are proactive now, you may be able to save the deal. Let’s get started.
Is My Banker Aware of the Changes in My Finances?
Your best bet is to be up front with all changes in your finances, because your banker is going to find out anyway. The paper trail that you had to leave when you were first vetted for preapproval will lead a banker to whatever he wants to find. In short, if you do not surprise your banker now when something happens, then he will not surprise you at the closing table by pulling the loan out from under you.
How Did These Changes Come About?
When you meet with your banker to discuss the changes, bring proof that they were not initiated by a boneheaded financial move on your part. Your lender will have given you rules of engagement upon your approval, with the most important of those rules being not to open any more lines of credit, buy any large assets, or co-sign on any new credit. The first step is to show the bank that you did not purposefully destroy your finances by defying the rules.
The next step is to your show your banker that your financial changes came about because of an unavoidable situation. Perhaps you had a medical emergency or you lost your job. These are both devastating occurrences, but it does not have to mean the end of the home ownership journey. Your condition may cause you to become eligible for government subsidy home loan programs that may actually improve your stability as a borrower. Your lender will know better than anyone, so ask.
Bring in records of your current cash flow and how you will get your consistent stream of income back if you lost it. If the numbers are in check, then you are just playing a numbers game, and you might be able to save a loan by moving some money around.
What If My Lender Completes Hangs Me Out to Dry?
This may happen upon your initial report. Some lenders simply cannot see past their computer screens, especially if you are working with a relatively new agent that has not yet earned the respect of his own company to override automatic decisions. This is when you should unapologetically take your offer to other lenders if you did not already during the vetting process. You probably did not; 75 percent of home loan seekers only fill out one loan application. If you are not yet in this situation and you are reading this article, take this statistic as a warning and make lenders compete for your business. You should have multiple options on the table if your primary lender ever backs out of an offer.
What If a Lender Tries to Keep My Down Payment or Origination Fees?
You may have cause for restitution if you get preapproved by a lender who then backs out but wants to keep your upfront fees. There have been many cases in which this exact situation occurred, once recently with a lender known as the PulteGroup. Unfortunately, this financial institution built a reputation for backing out of loans after preapprovals and keeping five figure down payment deposits from their former clients. The investment group was sued by the Arizona attorney general and settled to the tune of $1.18 million. This is certainly not a process that you should try to get into; your focus is, of course, on buying a house. However, under no circumstances should you let a lender take your money and hold your house hostage as well.
Perhaps I Can Lower My Loan Amount?
Check with your banker to see what happens if you lower the amount of money that you are seeking. He might be able to make the numbers work in such a case.
What Should I Do About My Finances?
Try as best you can to get your finances in the order that they stood when you were preapproved for the loan. If you can do this, show your financial profile to many lenders, not just one. This will help to ensure that you get a lender that does not throw you under the bus if something unavoidable happens to your money in the future.
Do not give up on a dream of home ownership just because life threw you a curveball. Stick out the process, and you will be a ber home owner for the experience. If you do everything that you possibly can and still get denied after a preapproval, look at it as a learning experience, scare up even more cash, fix your credit to perfection, and come back with both guns blazing in six months.
2 Point Highlight
Bring in records of your current cash flow and how you will get your consistent stream of income back if you lost it.
If you are not yet in this situation and you are reading this article, take this statistic as a warning and make lenders compete for your business.
