The Top 5 Things That Delay Mortgage Closings
(and How to Avoid Them!)
You've done it! You found the perfect home, your offer was accepted, and you're officially "under contract." The finish line is in sight, right? The keys are practically jingling in your pocket, and you're already picturing your furniture in that gorgeous living room.
But hold on a minute! While being under contract is a huge milestone, the period between offer acceptance and closing can sometimes feel like an obstacle course. There are many moving parts in a mortgage transaction, and unfortunately, several common pitfalls can turn that exciting sprint to closing into a frustrating crawl.
I understand that delays are the last thing you want when you're so close to homeownership. My goal is to make your closing process as smooth and stress-free as possible. That's why sharing the top five things that commonly delay mortgage closings, and more importantly, helping you avoid them!
Let's make sure your journey to homeownership is a celebration, not a series of headaches.
1. Incomplete or Missing Documentation
This is, hands down, one of the most frequent reasons why closings are delayed. Mortgage applications require a significant amount of documentation to verify your financial health, and even one missing or outdated piece can bring the entire process to a screeching halt.
Why it delays things: Think of your mortgage application as a complex puzzle. Every piece of documentation, like pay stubs, bank statements, tax returns, and employment verification, is crucial for the big picture. If a piece is missing, blurry, outdated, or doesn't match other information, the underwriter can't complete their assessment. This leads to "conditions," or requests for more information, which then have to be submitted, reviewed, and approved, adding days or even weeks to your timeline.
Common Documentation Headaches:
Outdated Pay Stubs/Bank Statements: Mortgage applications are time-sensitive. Documents like pay stubs and bank statements often need to be from within a specific, recent timeframe (e.g., within the last 30 or 60 days). If your initial submissions expire during the process, you'll need to provide updated versions.
Missing Pages: Accidentally forgetting to include a blank page of a bank statement or a schedule from your tax return can cause delays. Lenders need all pages to ensure nothing is hidden or missed.
Illegible Scans/Photos: If the documents you provide are difficult to read, they'll be rejected.
Unexplained Large Deposits: A sudden, large deposit in your bank account that isn't clearly from your regular income or a documented source might raise a red flag. Lenders need to "source" large deposits to ensure they are not undisclosed loans or money laundering.
Employment Gaps/Changes: Any recent changes in employment or significant gaps require additional explanation and documentation to show income stability.
How to avoid it: From the start, provide all requested items upfront, even if they seem redundant, and be sure to include every page of bank statements, including blank pages. When submitting documents digitally, use clear, high-resolution scans or well-lit, glare-free photos. If you receive a large deposit, such as a gift for your down payment, talk to your loan officer right away to determine the necessary documentation, like a gift letter and the donor's bank statement. Report any changes in your employment, income, or job status to keep the process smooth and transparent.
2. Last-Minute Financial Moves
Your credit score and financial stability are assessed at the beginning of the mortgage process. But what happens if you make big financial decisions after applying for your loan? Often, it leads to significant delays or even a denied loan.
Why it delays things: Lenders typically do a "soft pull" of your credit right before closing. This is to ensure that your financial situation hasn't drastically changed since your initial application. Any new debt, large purchases, or significant credit inquiries can alter your debt-to-income (DTI) ratio or lower your credit score, potentially disqualifying you for the loan you were approved for.
Common Credit-Related Issues:
Opening New Credit Accounts: Getting a new credit card, signing up for a "store card" to get a discount, or opening a new car loan.
Making Large Purchases on Credit: Buying new appliances, furniture, or a car on credit, even if it's an existing card.
Co-signing a Loan: Becoming a co-signer for a friend or family member's car loan or student loan.
Closing Existing Credit Accounts: While seemingly counterintuitive, closing old, established credit accounts can sometimes negatively impact your credit score by reducing your available credit and shortening your credit history.
Missing Payments: Even one late payment on any bill can hurt your credit score right before closing.
How to avoid it: Once you've applied for a mortgage, freeze your finances; I mean don't make any major financial changes until after closing. Also avoid opening new lines of credit, even for small purchases, and hold off on financing or buying big-ticket items like cars, furniture, or appliances. Keep all existing credit accounts open unless your loan officer specifically advises otherwise, and continue paying all your bills on time without exception. If you're unsure about any financial move or think you might need to make one, consult your loan officer first; they can guide you on what's safe and what might jeopardize your loan approval.
3. Valuation & Property Issues
The appraisal is a critical step in which a third-party appraiser assesses the market value of the home you want to purchase. It's not just for you; it's how the lender ensures the property is worth the money they're lending.
Why it delays things: If the appraisal comes in lower than the agreed-upon purchase price, or if the appraiser identifies necessary repairs that need to be completed before closing, it can cause significant delays.
Common Appraisal Obstacles:
Low Appraisal: The appraised value of the home is less than the sale price. This means the lender will only finance up to the appraised value, leaving a "gap" that either you (the buyer) need to cover, the seller needs to drop their price, or you need to renegotiate. This can lead to tense negotiations and new agreements.
Required Repairs (FHA/VA Loans): For government-backed loans (FHA, VA), appraisers often look for specific safety, soundness, and security issues. If they find problems like peeling paint (lead-based paint hazard), a leaky roof, or a broken handrail, these repairs must be completed and reinspected before closing.
Access Issues: If the appraiser can't get timely access to the property, the appraisal will be delayed.
How to avoid it: To keep the appraisal process running smoothly (and your stress levels low!), team up with your real estate agent to make sure your offer lines up with recent home sales in the area. This helps avoid surprises like a low appraisal throwing a wrench in the deal. While you can't control the seller, it doesn't hurt to have your agent gently remind them to keep the home in good, safe condition, especially if you're using an FHA or VA loan. A few minor repairs up front can save everyone a major headache later. Make sure your agent quickly coordinates access for the appraiser; delays here can slow everything down. And just in case the appraisal comes in lower than expected, discuss strategy with your agent ahead of time. Whether it's negotiating with the seller or covering the gap, having a game plan ready means you'll be prepared for anything.
4. Unclear Ownership & Liens
Title insurance protects you and your lender from any issues with the legal ownership of the property. A title search is conducted to ensure the seller has the right to sell the property and that there are no outstanding claims or liens against it.
Why it delays things: If the title search uncovers problems, such as undisclosed heirs, outstanding judgments against the seller, unpaid property taxes, or easements that weren't disclosed, these clouds on the title must be resolved before the sale can proceed. Clearing these issues can be a lengthy legal process.
Common Title Troubles:
Liens: Outstanding mechanics' liens (for unpaid contractor work), tax liens, or judgment liens against the seller.
Boundary Disputes: Ambiguity regarding property lines.
Undisclosed Heirs: If the property was inherited, and not all heirs have signed off on the sale.
Errors in Public Records: Simple clerical errors in property records.
Missing Signatures: Prior deeds or documents are missing necessary signatures.
How to avoid it: A smooth closing starts with a prompt title search, so make sure your lender or closing agent kicks off that process as early as possible to allow time for any surprises to be cleared up. It also helps when the seller is upfront, so encourage your agent to stress the importance of full and honest disclosure, especially when it comes to past repairs or ownership quirks. If a title issue does pop up, don't panic. These things happen, and they're usually out of your hands. Stay patient and keep the lines of communication open with your loan officer, agent, and title company so you know exactly what's happening and how it's being resolved.
5. Underwriting Delays & Last-Minute Requests
Even with all your documents in order, the underwriting process itself can sometimes experience delays due to volume, complexity, or last-minute questions.
Why it delays things: Underwriters are the gatekeepers. They are responsible for a final, comprehensive review of your entire financial profile, the property, and the loan terms to ensure everything meets lender guidelines and regulatory requirements. This is a meticulous process, and even after initial approval, an underwriter may have follow-up questions or require clarification on something in your file.
Common Underwriting Roadblocks:
High Volume: During peak seasons in the housing market, underwriting departments can get very busy. Thus typically means longer review times.
Complex Financials: If you have a complex income structure (self-employed, commission-based, or multiple jobs) or unusual financial transactions, it may require a more in-depth review.
New Regulations: Changes in mortgage regulations can sometimes require underwriters to request additional information they didn't need before.
Last-Minute Verification: An underwriter may do a final verification of employment or contact a bank to confirm a balance right before closing.
How to avoid it: Choosing the right lender can make or break your homebuying experience, so go with someone experienced and reputable. A seasoned lender knows how to package your loan properly from the start and anticipate what underwriters will need. Once you're in the process, be lightning-fast when your loan officer or processor asks for documents (even if it feels like the hundredth request!). Most delays happen simply because of slow responses. Remember, honesty is everything. Be upfront from the start about your finances, employment, and any information that might raise concerns. Surprises are the real deal-breakers. Finally, trust the process. Underwriters may seem meticulous (and yes, sometimes frustrating), but their job is to make sure your loan is solid, for your sake as much as the lender's!
The Bottom Line: Be Proactive
While some elements of the closing process are out of your direct control, your proactive approach and clear communication can really reduce the likelihood of delays. By understanding these common pitfalls, preparing your documents diligently, making sound financial decisions, and working closely with your lending team, you empower yourself to have a much smoother and faster journey to getting those coveted keys.
I pride myself on transparent communication and guiding my clients every step of the way. Contact me to discuss how I can provide a personalized mortgage solution for you today!
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Debbie Betts, NMLS #259629, is a mortgage lender under The Mortgage Co. NMLS #68929. Her license #100030463. This is information purposes only and is not a commitment to lend. Equal housing opportunity.