February 20, 2024
Once your FHA loan application is approved by your loan officer, is your FHA loan really “bulletproof” until closing day?
Some believe that it is, but this is not true, there are many things that could wind up stopping a home loan before closing day.
For example, your seller may change their mind and decide not to sell. The house might appraise for a lower amount than the seller asks for, and the borrower ultimately chooses to back out of the deal.
There are too many scenarios to count. A home that is damaged or destroyed before the closing day is just one variable. While that may sound extreme, that’s a problem that happens often enough to require provisions in FHA loan regulations to guide borrowers and lenders through.
Don’t Make Career Changes Before Closing Day
Any alterations in your employment and income may require the lender to double-check to see if your new job is stable and reliable.
The lender may be forced to verify your financials a second time if the nature of your income changes along the way. Avoid moving to a lower-paying job, moving from salary to contract, or other big alterations like starting your own business. Save these for after closing day for best results.
Never Miss A Payment Before Closing Day
Late and missed payment problems after your loan application is approved may show up on your credit report before closing day. When the lender sees a problem like that prior to closing day the situation may force a reconsideration of your mortgage.
Don’t Apply For New Credit Until After Closing Day
Your FHA lender has the right to verify your credit a second time or even a third time before closing day if conditions warrant. You may not be told this credit check is happening or you may be advised when you approve your initial credit pull that another may be required.
An FHA loan officer may run your FICO scores a second time. This is a common banking industry practice. If you incur new debt, the lender may have no choice but to requalify you for the loan.
Do Not Change Your Cash To Close Payment Procedure
As you approach your closing day, someone pretending to be from the lender may try to ask you to pay the cash you need to close the home loan in a different way than you and the lender agreed to previously. Do not heed such requests.
No matter what you are asked to do by someone claiming to represent your lender, DO NOT change the payment arrangements without personally speaking to your loan officer by phone (NOT e-mail, text, or social media) about any changes in the plan.
Don’t Expect To Move in On Closing Day
Why do people schedule the moving trucks on the same day as they close the deal? Typically because they don’t expect anything unexpected to happen. But there are plenty of variables that could require you to reschedule, including personal circumstances, job issues, and even disasters or accidents.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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