This is from a New York Times article describing 6 reasons you may wait and wait to get a loan, but never get it closed:
Insufficient Funds: Not surprising, I guess, you’ve got to have the money.
Cloudy Financial Picture: It’s not clear where the funds come from. For instance there’s $100,000 in your bank account but it’s been there for two days and your pay stubs don’t indicate it should be there. Basically, lenders don’t want to see parents placing money in a child’s bank account for a few days just to get the loan funded.
Bad Credit: Again, not surprising. If you have bad credit lenders won’t lend.
Low Appraisal: This is a little more complicated because it is not always the case the appraisal will end the lending process, but a case will need to be made for why the appraisal is incorrect. Even then if the appraisal comes back low it’s probably time for renegotiation with the seller.
Property Problems: In the case of a condominium the problem could be that too many other owners in the building are delinquent on their loans or HOA dues. Another problem I’ve seen is the percentage of renters to owners in the building is too high, and strangely if one owner owns more than 10% of the units in the building. Imagine you are interested in a ten unit building, but one owner owns two units making that person’s ownership percentage 20%, for many lenders that would stop them from lending on the property!
Information Mix Ups: If the lender does not get the right information about you, and it is not corrected they will deny the loan for sure. Lenders are double and triple checking borrower’s information.
Check out the New York Times article “Triggers For Rejection” here!