I don't have to convince you that mortgage approval can be tricky. Take the case of a home buyer who wrote me recently thanking me for listening to his dilemma. On the day of closing, his loan was denied because the appraiser couldn't confirm the purchase price. (You got that, right? His mortgage approval was retracted on the day of closing. Ugh!)
Why couldn't the appraiser confirm the purchase price? Because other homes similar in size, price, and age in the same neighborhood had not sold recently! So the home buyer wanted to know... which comes first, the chicken or the egg?
Hi, my name is Kate Ford and I am a mortgage insider. I have helped thousands of homeowners for more than 20 years get the best mortgage rate at the least cost.
It probably comes as no big surprise to be told mortgage lenders have a different vocabulary compared to the average homeowner. Their terms and acronyms can be downright baffling.
That is why I began this website, Get-Your-Best-Mortgage-Rate.com a few years ago. I have made it my mission to translate the secret language of mortgage lending, making it easy for homeowners and home buyers to understand.
Back to the home buyer's dilemma... I can certainly understand his disappointment. Anticipating loan approval only to discover a major hiccup on the scheduled day of closing can be heartbreaking.
Please allow me to describe with every day language what the lender may be signaling. The home buyer heard the lender say...
But translated, here is what the lender should have said...
It's important to understand the difference between preliminary approval and final mortgage approval. Final loan approval is based on fulfilling conditions from the preliminary approval.
These outstanding conditions form a list. The to-do list might call for something major like approving an appraisal or something as minor as adding initials to a loan disclosure.
But not until every condition has been checked off the to-do list does a preliminary approval become final. Without the final approval, there can be no closing.
Equally important, all borrowers unable to finalize a mortgage transaction should not be timid about proactively questioning a lender.
Because unless they can get to the bottom... Until the lender will say out right... Without understanding the to-do list... Borrowers are walking around in the dark, likely bumping into walls, as their transaction begins to stagnate.
If you find yourself in this situation, there's really no benefit to further speculation or biting your fingernails. You'll have better results if you pick up the phone and call your loan representative.
In plain language, ask what halted your mortgage approval. Don't beat around the bush. Come right out and point-blank request an alternative plan of action.
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