The difference between being “approved” or “denied” lies in the hands of your loan officer. In 2017, nearly 11% of home loan applications and over 26% of refinancing applications were denied. Unless there are mistakes made by the loan officer or incorrect information given by the lender, denials should be a rare occurrence.
Recently, I submitted a total of 190 loans to underwriting in the course of a year. I'm proud to say that 188 of those closed, giving me a closure rate of 98.9%. So what happened with the two loans that were denied? While I’m not claiming to be perfect, both loans that were denied were denied in underwriting because the clients, both business owners, refused to produce me with the documents I requested.
These business owners owned more than 25% of their business, which means that we must look at their business tax returns in addition to personal tax returns. I also needed all the K-1s, W-2s, and 1099s that went with their business tax returns. In both instances, the clients insisted the paperwork did not exist or that I did not need it. They fought the process, so rather than finding out on day one that they wouldn't be approved, they found out weeks into the process, which cost them time, money, and stress.
Every piece of the puzzle is essential, and it's always better to put everything on the table in the beginning. Missing pieces equal no loan. It might be a bit of a stretch to say this, but when you're holding back documents from your lender, it's almost as if you're a drug addict at a doctor's appointment. You're doing drugs, but you're trying not to let the doctor know. However, once the doctor reviews the lab report, you can't lie and say you didn't take those drugs. The loan process is that detailed. Whatever you're trying to hide will be found out and it will cost you. It might be weeks and thousands of dollars into the process. Please be transparent and don't fight the process.
If you'd like to learn more, Mark Greene wrote a great article called “The Perfect Loan File." It was published in Forbes on March 9, 2012. You can check it out HERE
If you live in Louisiana, Arkansas, Mississippi, Alabama, and Florida and want to learn more about working with me on your mortgage, check out my other website www.weeksteam.com
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Every year an average of 21 million people apply for mortgages in the US, and only around 7 million close. I'm on a mission is to change that by spreading mortgage education. Sign up for my newsletter to be a part of my Mortgage Peace Movement!