I’ve submitted all my financial documents to the lender about a month ago for a cash-out refinance on a home I own outright. But it feels like there’s always a new problem to solve every day. First, they told me I needed to buy flood insurance because I’m in a flood zone, even though I’ve never had a flood. I had to spend $6,000 on that. Then I spent $600 on the appraisal, but there was an error with it, and the lender is waiting on the appraiser to fix it. They’ve given me conditional approval but asked me to write a letter explaining a couple of late payments on my credit. They’ve also requested my passport, but I don’t have one. Yesterday, they called to tell me there’s a fraud alert on my credit, but I don’t know why they’re saying that. Should I consider looking for a new lender? I’m using a no-income-verification loan because I’m a business owner and can’t use my taxes for income due to deductions.
You applied for a non-QM loan, which gives the lender a lot of flexibility in asking for additional documentation. This should have been explained upfront. Does your broker know what they’re doing? Is this a bank statement loan or a P&L program?
@Dar
Yes, he’s aware. He seems to think everything is fine. I gave them my bank statements, so I thought that would be enough, but I just don’t know how long the approval process takes.
Alden said:
@Dar
Yes, he’s aware. He seems to think everything is fine. I gave them my bank statements, so I thought that would be enough, but I just don’t know how long the approval process takes.
There’s a lot of steps in the process, especially for a non-QM loan. If your broker says everything is fine, then it’s probably going smoothly. After about 28 days, you’re getting close to the 30-day mark, so they should be finalizing the approval with any necessary conditions.
It sounds like your loan is progressing normally. With conditional approval, they’ve already reviewed your initial documents. What you’re seeing now is them fulfilling any requirements before closing. The requests like explanations for late payments and ID verification are standard, especially for a loan like yours. The appraisal revision is also normal. For a no-income-verification loan, expect the process to take around 60 days, so don’t worry yet.
@Cleo
Thanks for the reassurance.
Your finances and loan type aren’t ‘normal,’ so why are you expecting the process to be? It’s important to understand that the process takes time, especially with the type of loan you’re doing.
Shay said:
Your finances and loan type aren’t ‘normal,’ so why are you expecting the process to be? It’s important to understand that the process takes time, especially with the type of loan you’re doing.
I didn’t know what the ‘normal’ process was, which is why I posted here.
@Alden
The ‘normal’ process involves a borrower with a regular income from pay stubs and tax returns. If you own a business, like you do, there’s going to be more scrutiny. The lender needs to make sure the loan is a good risk, especially since you’re doing a cash-out refinance. They want to understand why you need the money and assess the risks.
@Alden
This process can take anywhere from 90 to 180 days, especially for non-QM loans. They’ll keep requesting income documentation throughout the process.
It sounds like your broker should have prepared you for these steps upfront. If the underwriter didn’t have everything they needed, it can slow down the process. For example, things like flood insurance, appraisal deposits, and late payment explanations should have been collected early on. Your broker might not have informed you about all of this, but that’s something they should have done to avoid these delays.
@Rory
Thanks for the input. I think the issue is related to my address, but I’m not sure what’s going on. My ID is valid, I just don’t have a passport.
What did they need your passport for?
Meade said:
What did they need your passport for?
They probably needed it because your driver’s license might not match your new address. If that’s the case, they’re likely requesting the passport as a valid form of ID. It’s a bit unclear from your description, but that’s a common reason.
@Rory
That’s what I was trying to explain to OP. It’s possible that the lender isn’t communicating very clearly with them.
Meade said:
What did they need your passport for?
I’m moving from NJ to FL and still have my NJ license, which I gave them.
Meade said:
What did they need your passport for?
I’m moving from NJ to FL and still have my NJ license, which I gave them.
That could be the issue. You should update your license to reflect your new address.
@Meade
What’s the issue? The ID is valid.
Alden said:
@Meade
What’s the issue? The ID is valid.
If the address on your ID doesn’t match your current address, it raises a red flag. It sounds like you’ve provided most of what they need, but your ID doesn’t match your new address, which can cause delays.
Alden said:
@Meade
What’s the issue? The ID is valid.
They want your passport because your driver’s license will soon become invalid after you move to Florida. Since you’re crossing state lines, it’s necessary for them to verify your identity with a passport.