Mortgage lenders typically issue pre-approvals of real estate loans subject to certain conditions. When the buyer request funding, the lender turns to their underwriting department to ensure that the requirements have been met. Underwriters generally have full discretion to investigate any issue that might affect the borrower, the collateral, and the details of both.
Examples of data that underwriters review includes:
- Checking and savings statements
- Assets, specifically liquid assets such as securities
- Credit card balances
- Credit Score and reports, with an emphasis or payment habits
- Proof of income (payroll stubs)
- Tax filings
- Source of down payment funds
According to Peter Miller, author of The Common Sense Mortgage, a mortgage underwriter can look at “just about anything that a lender needs to be confident that you can repay your mortgage as agreed.”
Underwriters are especially sensitive to recent changes in the personal and financial activities of their prospective borrowers. Significant changes in the pattern and amounts of deposits or withdrawals are likely to draw investigation and requests for an explanation.
Delaying providing your lender the documentation they request will delay the closing. Nonresponsive borrowers, borrowers that are slow to provide requested information or follow-up information are more common than you might think.
In August 2015, the Consumer Financial Protection Bureau (CFPB) required lenders to complete and provide a 5-page Closing Disclosure Form three days before a scheduled house closing. The form replaces the loan estimate with the actual figures to be paid at closing. A discrepancy on the Form will postpone the closing until any errors are corrected and approved by all parties. Once corrected the Form must once again be provided 72 hours prior to closing.
So, if there is a financial issue or the form has to be changed for some reason and the closing was to occur just after the 3 day period, then the closing date must be rescheduled.