Approximately 528,000 home sales occurred in Florida in 2021. While you might not have bought a house then, you may be ready to buy one now or in the near future.
Learning a few things about mortgage loans might be helpful if you want to buy a house with a loan. For example, can a loan be denied during or even up to the day of closing?
This question isn’t common, yet it’s essential to ask. Let’s learn if a lender can deny your loan during the closing process or even up to the day of closing on a property.
Explanation of Clear to Close
The loan process takes time and begins with an application. Next, your lender processes the application. Then, they send it to the underwriting department for approval.
You can only close your home purchase once the underwriters approve the loan. When they approve it, they'll let your lender know that your file is clear to close.
This means the underwriters evaluated every detail and that you meet the criteria for a loan. Most homebuyers assume that the clear to close seals the deal. However, this isn't always the case.
Real Estate Closing Day Checklist
Closing day is the scheduled appointment for all parties to sign the necessary documents. Buyers often bring their real estate attorneys to closings, while sellers might also have a closing attorney.
Your real estate attorney helps you understand each document you must sign and your other responsibilities. For example, you'll need to send a wire transfer for your amount of funds needed to close prior to or immediately after your closing appointment.
Just before your closing appointment, your lender will check your credit score. The purpose is to ensure that nothing has changed. Your lender might also check your credit score just after closing the deal.
So, what can go wrong during this appointment? The answer is several things.
Problems That Might Occur
If your lender finds negative changes in your credit score, they may deny the loan.
For example, if your credit report shows a major purchase with a loan, you may no longer qualify for the mortgage. Any significant changes can result in the lender denying the loan.
The lender may also deny your loan at your real estate closing if they find a problem with the appraisal. For example, if they discover something that was overlooked, they can void the loan.
Additionally, the lender might pull out of the deal if they discover an issue with the home title. This can happen at any time during the process, even at the last minute.
Can Your Real Estate Loan Be Denied During or After Closing?
So, can your loan be denied during the closing process, even up to closing day? The answer is yes; this can happen. However, it's rare.
As a homebuyer, you can take steps to prevent problems like this from happening. One step is to hire a reputable title company for assistance.
Contact Emerald Coast Title Services. Our experienced team can help you prepare for your home closing and avoid problems from occurring.