The Market

Don't let the bank get in your way of buying an apartment

By Lucy Cohen Blatter  | August 17, 2015 - 12:59PM

Even once your offer's been accepted, there are several things that can still cause a mortgage deal to fall through. 

Here are the top culprits, according to the New York Times.

1. Not disclosing key financial information. "Borrowers should be absolutely forthright about their financial circumstances when seeking lender pre-approval for a loan," writes Lisa Prevost in the Times' Mortgages column. If a borrower is behind on real estate taxes or child-support obligations, the bank will find out and it could easily throw a wrench into your plans.

2. Making major credit purchases before closing. If your mortgage application is still pending, check with the lenders before making any major purchases -- like big furniture or cars. Lenders recheck borrowers' credit just before closing, and the sudden appearance of new debt obligations can cause concern.

3. A low appraisal (or higher-than-expected selling price). Especially in competitive markets, this is often the most common reason a mortgage deal falls through. The loan amount the bank decides on is based on the appraised value not the price in the contract. What that means:  if the appraisal comes in significantly below the sales price—and you got a little carried away in the midst of a bidding war—you may find your financing may come up short.

4. Storm damage. "Extreme weather can wreak havoc on housing markets," reports the Times. 

And remember that in strong markets like New York City, pre-approval is key. The Times even reports that in red-hot Silicon Valley, buyers are being expected to get a loan commitment ahead of time.  A loan commitment has already passed underwriting, so all that's required for final approval is an appraisal (see above) and employer verification. For more tips on issues that can derail your mortgage application—and how to avoid them—we've got a guide here.


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