The last thing you want to hear when you are about to close on a home loan is that there are closing delays. Unfortunately, it happens all of the time, even with VA loans. Knowing how to prevent these issues can help you keep your closing date on target.
When you complete your loan application, make sure everything is completely accurate. A common example is transposed numbers in the income section. If you write a wrong number, but then cannot verify that amount of income when you supply your pay stubs and W-2s, it could cause a delay in your closing.
The lender will have to go back to the drawing board, so to speak, as it’s like starting over with your loan. Even if the mistake was on something minor, such as your date of employment or your previous address, the lender has to verify everything. With one mistake on the books, they may feel the need to re-verify everything, causing a further delay.
You know lenders check your credit when you apply for a loan, but did you know that they also check it again before the closing? A common mistake many borrowers make is assuming they can open new credit after they get approved for their VA loan. Unfortunately, this could be a deal-breaker if you are not careful.
Any change in your credit may cause the lender to start the approval process all over again. They will have to verify that you can still afford the loan as well as ensure that your debt ratio remained the same. If your credit score dropped because you had several new inquiries on the report, a lender might ask more questions or need more verification to prove that you don’t have any new loans.
VA lenders will verify your employment when you apply for the loan, but they’ll do it again before you close. Just like taking a second look at your credit, lenders want to make sure you have the same job. If you change jobs before your loan closes, the lender has to start all over again.
Changing jobs can cause a delay in your closing or it might leave you with a loan denial. It depends on the type of change you made. If you changed jobs but stayed in the same industry and have similar income, a lender may still allow you to close once you have proof of 30 days of income. But if you changed jobs and went into a completely different industry or your income dropped, it could be a deal breaker.
It’s a common myth that it’s impossible to get a VA appraisal approved. The only requirement the VA has that other loan programs don’t is the Minimum Property Requirements that they have. This may sound scary, but it’s really just a way to make sure the home is safe, sound, and sanitary.
Unfortunately, appraisal issues can cause a delay in the closing, though. If the appraisal finds something that prevents them from passing the appraisal, they will have to let the lender know. This could cause a delay in the closing. The hope is that the seller will fix the issues that the appraiser finds and that the loan still closes. In some cases, though, it’s not that simple; it depends on the seller’s willingness to help.
Lack of Assets
If you cannot verify your assets in time for the closing, it could cause a delay. Even though the VA loan doesn’t require a down payment, there are still closing costs and the funding fee to cover. This means the lender will have to verify the assets you will use to pay these costs. If the funds are not seasoned (in your account for at least 2 months) or you can’t verify that they are yours, it could cause a delay.
VA loan closing delays can be frustrating, but they don’t have to be the end of the road for your loan. You are in control of several of the above issues, though. As long as you don’t harm your credit score, change jobs, or lack assets, you could prevent any delays.