1. LYING ABOUT OR OMITTING INFORMATION ON THE APPLICATION
Despite better judgment, this is an area that some borrowers will venture to in order to attempt to get better terms or approval for a loan. We have seen the lying from embellished stated tenures at work, to work position, to inflated savings balances. Some also feel lying about the property occupancy or omitting additional owned property will help. It all hurts in the end. Bank and Private Lender underwriters are individuals that are accustomed to reviewing paperwork and are able to sniff out inconsistencies. The moment that occurs, more speculation is required which could either slow your application or simply leave it dead in the water. Remember that lying and omitting information is Mortgage Fraud and a criminal offense. Few are aware, but jail time can be served for such actions.
2. PROVIDING POOR A/O UNORGANIZED PAPERWORK
Lenders rely on being as efficient as possible in a competitive market. It is suggested that paperwork is organized and presented in an orderly fashion. Also, ensure the documentation that is being provided is being clear. Lenders provide various ways to get documentation to them. They vary from online uploading, standard email, fax, and even business text lines. Nothing frustrates a lender and their underwriters more than receiving incomplete documentation. Each time a document is received, the time has to be sent to review. Depending on the type of loan you are obtaining and the underwriter reviewing… your ability to provide solid paperwork can sway the decision when your application is classified as “borderline.” Why take the chance?
3. UNEXPLAINED “OFF COLOR” DEBTS
This one is very straight forward. Know your debts. If there are debts that seem out of the ordinary based on the application, they must be explainable. For example, if you earn an income of $80,000 but there is a recent $50K joint revolving credit loan that has been open for 7 months, there should be a clear explanation as to why it was obtained, whom it is joint with, etc. Knowing where you’ve been, where you are, is a pretty good indication as to where you’re headed.
4. NOT BEING ABLE TO PROVIDE ADEQUATE DOCUMENTATION
Being able to provide adequate paperwork is an extension of #2. A lender will require specific documentation for your request. If you can’t provide or are firm on not providing, it may be a cause for concern. For one, it can be a red flag for fraud. Secondly, specific documentation is required to piece the application together. If the puzzle is incomplete, it makes for a tough decision making process. Keep in mind, that private lenders are more flexible but due diligence is still required to a certain level to assess the risk beyond just the property.
Being indecisive late in the process is a frustration to lenders and their underwriters. Lenders understand that it is a big decision, but most lenders will provide you opportunities to not proceed prior to preparing paperwork. Time is valuable for all parties. Being indecisive late in the process is frowned upon. With private lenders, it can have an impact on the terms should you decide to not proceed, but approach the lender again. This is not due to being vindictive, but due to the extra time being placed on the file. Also, the lender’s criteria and pricing may change from one month to the next.
6. POOR COMMUNICATION
Communication is so key. Reputable companies focus on providing timely responses and keeping the line of communication open to their customers. If the communication skills of a customer are very poor and the lender or their underwriters seem to have to chase you to obtain paperwork at the beginning of the process; one can only imagine if the file becomes a problem file. In many cases, it is better for a lender to simply walk away from a perfectly good file due to the fact that current actions are a sign of future actions. The risk and stress that can accompany a file exceed the reward.
7. A POORLY KEPT PROPERTY
A common know statement is how a property owner keeps their property is a sign of how they keep their lives. Even the best of files can fall flat at the end because the property is in extremely poor condition. No lender ever wants to initiate foreclose. In the unfortunate event; a well maintained property can get “sale ready” and can sell much quicker than a shack.