Michael Shotnik
Branch Manager
February 22, 2018

What can go wrong during the loan process

(and how to avoid these pitfalls)

Even when you think you have all your ducks in a row during the mortgage loan process, there are things that can go wrong. We’ve outlined some of those things and how to avoid them. There are three phases of the loan process: approval, underwriting, and closing. Our team works hard to get our clients approved for their loan. Further, we work to anticipate problems before they arise. That being said, we don’t know what we don’t know. This blog is intended to educate our potential clients so they can be prepared for the process and we can work as a team to avoid any problems during the loan process!


Low Appraisal

Low appraisal is probably the most frequent problem during underwriting. Sometimes value comes in lower than the purchase price. If the buyer can’t come up with the money to fill the gap or the seller won’t lower the price to meet the appraisal, this can prevent the loan from completion.

The Property itself isn’t approved for a mortgage

Another frequent hiccups occurs when a property itself does not qualify for a loan. Similarly, if the appraiser finds that the structure is non-conforming, it can require quite a bit of money to bring the house up to code. Sierra Pacific offers a unique loan program, 203(k) to help with this scenario.


Funds not sourced

We know what you’re thinking, huh? Sourced? Something that can happen during the loan process is that the money that is set aside for a down payment cannot be properly sourced. In layman’s terms: the underwriter can’t determine where the money came from. What does seasoned mean? All funds for the down payment must be from acceptable sources (payroll, employer, gift from a family, etc).


Divorce, Separation, Child Support

Michael spoke about this a few months ago. And we know it’s a sensitive subject, but we also want to make sure that you’re prepared before starting the loan process. If there’s been a divorce or separation and there are children involved, and there’s child support being paid or received, we need official documentation. What does that mean? That means we need the court stamped agreement(s), which generally includes the separation agreement, decree, and child support/alimony agreement.

In closing, we don’t want anything to go wrong during your loan process and we want to make this as seamless of a process for you as possible. So, in the wise words of the boy scouts, always be prepared! If you have any questions regarding what is needed ahead of time, we’re always here! Feel free to give us a call or email today.





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Sierra Pacific Mortgage Company, Inc.

Sierra Pacific Mortgage NMLS# 1788. Michael Shotnik NMLS: 218281, CO License: 100017466. Regulated in Colorado by the Division of Real Estate #988320. To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.