Financing Issues with Lender

[Kevin Pinkard]

Hello all, I'm just curious if I am the only one that has issues with the lenders continuing to question if i have enough liquidity in funding before closing? We have had to extend our closing 3 times because the lender waits until a couple of days before closing to aske if I have extra funds outside of the down payment and closing cost. Each time its another $5k or $10k so that my DTI will fit under the threshold but the only debt I have is my primary property and the investment properties im trying to buy. Im on theilitary and make well over $80k a year from my W2. One of the properties is currently rented out but they don't count that potential income for me but they do count it as a debt (that doesn't make sense to me). Is this normal for the lenser to continue to move the bar?

[Brittany Minocchi]

Usually funds are verified right off the bat. If the lender is asking for additional funds, it might be something that the underwriter is questioning. Maybe there are funds in an account that haven't seasoned yet and are unusable until a certain date? Maybe they need more down to make your DTI work? Did you increase the purchase price that you originally included on your application? Lots of possibilities that could cause the numbers to change, but changing them multiple times and doing it so close to closing is concerning.

Without knowing the full picture, it sounds like the lender you’re working with has an overlay (“rules” that some lenders have above and beyond the Fannie/Freddie guidelines) preventing you from counting the income from the subject property. Typically if it’s occupied you can ask the seller/list agent for lease agreements, or even if it’s not occupied the rental information on the appraisal could be used. You can expect to count up to 75% of rents- the other 25% accounts for vacancies. 

[Dennis Muno]

Quote from @Kevin Pinkard:

Hello all, I'm just curious if I am the only one that has issues with the lenders continuing to question if i have enough liquidity in funding before closing? We have had to extend our closing 3 times because the lender waits until a couple of days before closing to aske if I have extra funds outside of the down payment and closing cost. Each time its another $5k or $10k so that my DTI will fit under the threshold but the only debt I have is my primary property and the investment properties im trying to buy. Im on theilitary and make well over $80k a year from my W2. One of the properties is currently rented out but they don't count that potential income for me but they do count it as a debt (that doesn't make sense to me). Is this normal for the lenser to continue to move the bar?

 Hello Kevin,

Not to be judgmental but your lender must calculate your cash to close and all that info. Letting you move closing date thrice(without a very legit reason) is not professional and speaks volumes of your lender. 

The investment properties you own: are they in your name or in an LLC? If in your name, that may be part of why your DTI is high. Did you write off a lot of income for the rental properties? If yes, your income in addition to your military income will be low.

For loans, there is your income and then income for calculations(based on guidelines)

Depending on the loan type, there are usually maximum DTI requirements

[Kevin Pinkard]

@Brittany Minocchi I haven't changed anything and the only Numb3rs that changed was the closing costs.  I've had the money for both closing and down payment from the beginning. The only thing that's changed is what the underwriters want. I really find it odd that they wait until right before closing and ask me to show that I have another $10k over what is needed to close in my checking account. 

[Brittany Minocchi]

Quote from @Kevin Pinkard:

@Brittany Minocchi I haven't changed anything and the only Numb3rs that changed was the closing costs.  I've had the money for both closing and down payment from the beginning. The only thing that's changed is what the underwriters want. I really find it odd that they wait until right before closing and ask me to show that I have another $10k over what is needed to close in my checking account. 

They may want to see enough reserves to cover you for x number of months for each property you will own. This would be above and beyond your cash to close. 

[Kevin Pinkard]

Quote from @Dennis Muno:

Quote from @Kevin Pinkard:

Hello all, I'm just curious if I am the only one that has issues with the lenders continuing to question if i have enough liquidity in funding before closing? We have had to extend our closing 3 times because the lender waits until a couple of days before closing to aske if I have extra funds outside of the down payment and closing cost. Each time its another $5k or $10k so that my DTI will fit under the threshold but the only debt I have is my primary property and the investment properties im trying to buy. Im on theilitary and make well over $80k a year from my W2. One of the properties is currently rented out but they don't count that potential income for me but they do count it as a debt (that doesn't make sense to me). Is this normal for the lenser to continue to move the bar?

 Hello Kevin,

Not to be judgmental but your lender must calculate your cash to close and all that info. Letting you move closing date thrice(without a very legit reason) is not professional and speaks volumes of your lender. 

The investment properties you own: are they in your name or in an LLC? If in your name, that may be part of why your DTI is high. Did you write off a lot of income for the rental properties? If yes, your income in addition to your military income will be low.

For loans, there is your income and then income for calculations(based on guidelines)

Depending on the loan type, there are usually maximum DTI requirements

@Dennis Muno

The investment properties are the two that I'm trying to buy right now not previously held. Yes the properties are going to be in my name because this company don't let you close in an LLC. But this is a conventional loan!!

[Kevin Pinkard]

Quote from @Brittany Minocchi:

Quote from @Kevin Pinkard:

@Brittany Minocchi I haven't changed anything and the only Numb3rs that changed was the closing costs.  I've had the money for both closing and down payment from the beginning. The only thing that's changed is what the underwriters want. I really find it odd that they wait until right before closing and ask me to show that I have another $10k over what is needed to close in my checking account. 

They may want to see enough reserves to cover you for x number of months for each property you will own. This would be above and beyond your cash to close. 

That maybe true but what is bothering me is they didn't tell me this in the beginning (8 wks and counting) instead of setting a close date and then changing at the last minute. This has also annoyed the seller as they were told the 1st delay was for name changes on the paperwork. 

[Brittany Minocchi]

Quote from @Kevin Pinkard:

Quote from @Brittany Minocchi:

Quote from @Kevin Pinkard:

@Brittany Minocchi I haven't changed anything and the only Numb3rs that changed was the closing costs.  I've had the money for both closing and down payment from the beginning. The only thing that's changed is what the underwriters want. I really find it odd that they wait until right before closing and ask me to show that I have another $10k over what is needed to close in my checking account. 

They may want to see enough reserves to cover you for x number of months for each property you will own. This would be above and beyond your cash to close. 

That maybe true but what is bothering me is they didn't tell me this in the beginning (8 wks and counting) instead of setting a close date and then changing at the last minute. This has also annoyed the seller as they were told the 1st delay was for name changes on the paperwork. 

Don’t get me wrong, sometimes underwriters call for things we as lenders don’t foresee and can’t address until it’s noted as a condition for the loan….but pushing your closing date out multiple times and continuing to increase the funds you need to close are not the norm. Do closing dates get pushed, yes. Not 3 times. Do numbers change from your loan estimate to closing disclosure, also yes, but not as drastically as you’ve mentioned unless there’s a huge oversight somewhere. We know early on how much is needed for a down payment, have a rough idea for closing costs once we get a title fee sheet and estimate escrows, and know how much in reserves is needed for your situation. It’s interesting to me that this lender tells you you need $5k-$10k more to close but doesn’t explain why….

[Paul Defngin]

Quote from @Kevin Pinkard:

@Brittany Minocchi I haven't changed anything and the only Numb3rs that changed was the closing costs.  I've had the money for both closing and down payment from the beginning. The only thing that's changed is what the underwriters want. I really find it odd that they wait until right before closing and ask me to show that I have another $10k over what is needed to close in my checking account. 

Yup that is odd. Maybe there is more to the story but any good Loan Officer should have known upfront exactly what you needed.

Moving closing 3 times is not necessarily the underwriter’s fault and could be that your MLO is not communicating with you properly. 

Hopefully you get it all sorted out.