How do you handle a mortgage denial? What happens next? Do I get my deposit back? Why did this happen?
Mortgages are denied for a variety of reasons. Is this a common occurrence for home buyers? Not at all.
There are exceptions. For example, a buyer lost their job. You can’t get a mortgage if you have no income. This is a rare occurrence because home buyers commit to a house when they are financially secure almost always.
A mortgage denial is a disaster. This just happened. Let’s start at the beginning so you can learn from this.
The home buyers are both doctors. They are early in their careers because one is on a fellowship and the other is a hospital resident. Credit scores are excellent plus they have a good down payment. Since they came to the US from overseas, they both have visas are planning to become US citizens.
Doesn’t this sound great? Solid verifiable income, excellent credit and a great down payment. What could go wrong?
Shopping For A Mortgage
Although I sent them my article on why mortgage rates don’t count, they went rate shopping. Read this article and you’ll understand why this is a mistake.
Shopping for a mortgage should involve more than the rate of the day. There can be a huge disconnect between the banker and loan processing. Problems found that can be easily handled early on become last minute emergencies. Bankers I recommend are on top of their loans and work directly with processing.
Some folks dismiss the value of a banker relationship. They shop online exclusively. Often that online “bank” is really a referral service. Did you know that Weichert Financial is one of the real banks behind that online portal? Think Lending Tree, Rocket Mortgage etc. Your fees might be higher because referrals have referral fees. Oops!
A Mortgage Denial in the Making
My couple went with Chase because the man they spoke to quoted them the lowest rate that particular day.
One of their visas is not accepted by Chase. If they had focused on finding a great professional, this issue would have been identified 1-2 days after formally applying for their mortgage. Because the man they chose was basically an order taker, he had no idea for nearly 1 month that there was a problem.
During that time the buyers spent about $3,000. They hired an attorney who spent hours working for them. Additionally there was $1,000 on home inspections, $750 for a survey and around $350 for a title search.
Worst of all is what this did to the buyers. Imagine how upset they were! Think about the seller too with their house in moving boxes ready to close.
There is nothing you can do when your mortgage is denied. All of your expenses are lost. You do get your deposit back once you send the bank denial letter to the seller. While this is a relief, it doesn’t make you feel better.
Why Did This Happen?
This didn’t happen because Chase doesn’t accept a type of visa. This happened because my buyers chose a mortgage rate, not an experienced banking professional.
Weichert Financial Services is working hard right now to fix this mess. They were supposed to close soon. That won’t happen but Weichert Financial has found a way to fund their mortgage at a normal competitive rate in a few weeks.
Whether you’re buying a house or finding a landscaper, always make sure the person you hire is an experienced, capable professional. Buying a home is emotional. I’m sure my customers were advised by their family or friends to go to the local branch office. That’s not how you find the best mortgage banker. Ask me; I know several.