Archives for August 2008

How Property Taxes Should Be Calculated

August 13, 2008 - Updated January 4, 2018

Property taxes are going to be around for the foreseeable future. I am not going to discuss what property taxes pay for as it differs from city to city and state to state. What I’d like to discuss is how they are calculated and why it should be changed.

A typical formula used around the country is tax your property a percentage of the value of your home based on what the county assessor thinks it is worth. Lets say your local county government has a property tax of 1% and your home was assessed at $300k. You would pay $300k x 1%= $3000 a year in property taxes.

Im sure there are people out there who pay much more than that for houses worth less but lets roll with this. This is a great system when property values are going up because as your property value goes up the amount of money you pay in property taxes goes up. The county government does not look bad because they did not have to raise the percent to bring in more money, it was the market that did it.

For the most part, people do not complain about paying a little more in property taxes because the value of the property has gone up. Everybody likes hearing this news. Even to hear that it went up 10% in value in one year is pretty amazing. Our $300k example would result in a new value of $330k and new property taxes of $3300. Not bad knowing you could sell the house for $30k more and only had to shell out $300 more a year in property taxes.

Property values went up 30% to 200% during the refi boom of 2002-2006. This was just ridiculous. New cities were created because of all of the home building going on. This resulted in a lot of new revenue for these cities to bring in to fund their police and fire departments. Let alone the Parks & Recreation, new government and school buildings, and more spending. This system seemed to be good for everybody because with the rising cost of real estate most people still felt ahead.

Not So Fast

And then the housing bubble hit and home prices started dropping 12% every quarter erasing all of the equity gains each homeowner had. Foreclosures started popping up and people walked away from their homes.

With homes being foreclosed, the county government is losing out on the revenue it gets from the property taxes it collected. Now the county is in a bind because they assumed property values were going to keep on rising just like they were doing over the recorded history of real estate prices.

Since they were spending all of the extra surplus money they received to go out and buy stuff many county governments are now in debt and have no way to pay it back unless they make major changes. These major changes are doing things like laying off teachers, firefighters, police officers, county assessors (bad karma), road repair workers, etc.

Homeowners that were not complaining about paying a little more in taxes because of the previous values of their homes are now trying to fight the county and city governments because the county assessor is not lowering what they think your property is worth.

Even though you can go up and down your street and see homes selling for far less than what you were assessed at. What a city assessor and an appraiser look at are similar and different in a number of ways. The appraiser is getting paid either way. The county assessor needs the property tax revenue to stay the same so he can still have his job.

Now the county needs to raise more revenue than what it was bringing in during the refi boom to make up for all of the homes in foreclosure and rising prices on things like gasoline to fuel all of the government vehicles, pay salaries, utility bills, etc.

Would you believe that some counties are trying to raise property taxes on your declining property value? There argument is that you do want Police and Fire Departments, right? You do want a school around the corner for your kids, right? You want your kids to get picked up by a bus so you do not have to be late driving your kid to school, right? Looks like there is nothing you can do but play by the rules that do nothing but stick it to you.

What we need is a simple solution. And this is what I suggest.

Pay Property Taxes Based On How Much Property You Own

If I own 1 acre and you own 2 than you should pay twice as much in property taxes. Thats it.

And yes, it could be that simple.

Is there some Ford factory taking up 1000 acres in the city? Then they pay 1000 times more in property taxes than me and my 1 acre.

Could my remodeled house on the 1 acre piece of land with a backyard chipping green, pool, and tennis court be sold for twice as much as your house with the 2 acre piece of land thats never been remodeled and just has grass in the backyard? Yes. Doesn’t matter. You’re still paying twice as much in property taxes.

Why?

No More Bubbles – By going this route, cities and counties are not tying themselves into whats happening in the real estate market. Nor should they. The current way its done is great when things are going up but bad when things are going down. Do we really want to pay elected officials to run property tax tribunals listening to homeowners complain about how high their taxes are even though values plummeted?

Less Laws – Occasionally laws get passed which prohibit property taxes being raised or lowered (no one ever thought they would go down) which puts strain on the budget. By charging based on land own you wouldn’t need these laws.

Less Government Spending – You could eliminate the city assessors office and their budget completely. At a minimum the Treasurer’s office would absorb it but with a third of the work.

Ideal Scenario

The citizens (or elected officials) of the county approve an annual budget. They take this amount and divide by the number of acres (lots, etc) and come up with a per acre (lot, etc) amount. And you pay your amount based on the amount of land you own. Thats it.

In this scenario you could get rid of the city assessors office completely because why would you need them to asses anything anymore. How much money does that reduce from the county budget?

And why should the government be concerned whats on top of the land to begin with? Outside of trying to tax as much as possible it doesn’t make sense.

How many times have you seen homes that share a similar lay out and plot of land but one home owner takes better care of their home and has updated it with the new kitchen cabinets, granite counter tops, etc?

In the counties eyes the house that is better taken care of should pay more than the house that does not have all of the extras. But isn’t that really a shame. The people that put extra money in their house for new appliances or a new kitchen or bathroom should not be penalized.

The other house is probably being lived in by somebodys grandparents that have lived a certain way for the past 45 years and have not upgraded anything in the past 20 years. If it ain’t broke, don’t fix it.

The house is probably clean and spotless, but just old in style. But they both own the same land. Do not penalize the people that upgrade and make them pay more just because. They should be getting the money they put into it when they sell the house for more than grandma and grandpa next door.

Summary

Calculating property taxes could be so much easier. They are called “property taxes” and not “value taxes”, right? So why would we want to tax each other based up what a couple of people think the value of your home is worth?

And how do they exactly know what the value of your home is worth when they never go inside? They are not appraisers.

I am sure there is some good reason why things like State Equalized Value (SEV) came into existence but it should also go out of existence. Same thing with “mills” when a millage vote comes around.

Pass an annual budget. Divide by the amount of acres exist in the city. Tax by the acre. Send out the property tax bill. Thats it.

After that way of calculating for property taxes is adopted, then you can get into the nitty gritty of what you want your property taxes to pay for.

Where Can You Buy The P90X Workout DVD For Cheap

August 6, 2008 - Updated December 3, 2018

It seems like everyday I receive an email from somebody who is looking to buy P90X and save a couple dollars when buying the things needed to do P90X which are the P90X DVDs, P90X pull up bar, and resistance bands.

**Update 5-5-17**

Beachbody On Demand is live. For $99 a year you can view P90X and every other Beachbody workout ever made. This is by far the best deal available.

If you absolutely want to buy the P90X DVDs then the information below still holds true.

Before we get into how to buy P90X for cheap we need to understand how much P90X costs and what discounts are offered from Beachbody.

P90X = $119.85 + S&H at the Beachbody Store: Buy P90X directly from the source with a 90 day money back guarantee. The safest way to get P90X.
P90X = $89.89 + S&H for a Beachbody Coach: The best way to buy P90X is to sign up as a coach first. Its like being a “VIP” with Beachbody. You get 25% off all Beachbody products and a discount on shipping. You also get a website from Beachbody where you can promote their products and earn money. Nothing required of you when you sign up. I’d say 90% of people who sign up do it for the discounts. Beachbody started the Coach program because people who did buy P90X would get questions from friends, family members, co-workers, etc about how they are getting into such great shape. Instead of sending your friends to Beachbody to buy P90X you can now send them to your personalized site and earn a 25% commission on whatever they order. The discount adds up when you buy everything you need for P90X. I am a Coach and apart of the Club.

Can You Buy P90X In Stores?

No. Beachbody does not sell the P90X DVDs in retail stores. Beachbody does not have agreements with any major retail stores to sell their products. They instead keep all of their products inside warehouses that they ship out of directly. The only places you can buy P90X from is the online Beachbody store or from a Beachbody Coach.

What About Buying Used P90X DVDs?

Beachbody does not sell “used P90X DVDs.” When you buy the P90X DVDs new from Beachbody you get a bunch of bonuses such as a free mini website to track your results, cash prizes up to $1,000 a day just for working out, the P90X Nutrition Plan, and P90X Workout Guides.

Is It Worth Buying A Used P90X DVD?

Not really. What usually happens is the workout guides and P90X meal plan are missing and the used P90X DVD is scratched.

Can I Get A New P90X DVD Set For The Same Price As A Used P90X DVD?

In most cases, yes. Take the 10% discount with the club membership or the 25% discount with the coach account and you’ll see prices including shipping being within $5 – $10. What you have to ask yourself is if the $5 – $10 you are saving by buying used P90X DVDs on eBay or meeting someone via Craigslist is worth it.

If someone is basically giving the P90X DVDs away for free on Craigslist and they just want something for the real copy they bought then by all means go get it. You can always sign up for a Free Beachbody Account and access the exact same things available (workout guides, workout sheets, tips, etc.) to those who bought P90X from Beachbody.

Where Can I Buy Single P90X Workout DVDs?

I get a couple of emails a week from people saying one of their P90X Workout DVDs is scratched, not working, or they lost one. If its scratched or not working and you bought P90X from Beachbody or a Beachbody Coach and are within 30 days of purchasing then Beachbody will replace it for free. Sometimes Beachbody will replace broken discs within the first 90 days.

Let’s say a friend gave you their old DVDs and all but two of them work or you lost one. There is an option to buy single workouts. One of my only complaints with Beachbody is they don’t offer single DVDs of the original P90X workout. What Beachbody does offer is the opportunity to buy single workouts for $20 from the P90X One on One series or what used to be called Tony Horton’s One on One workouts.

The workouts are all done at Tony’s house hence the One on One title. The camera guy, Mason Bendewald (Mason Twists from Ab Ripper X) is the only other person in there. It makes for a little different setting than P90X without the cast members. Instead of trying to keep up with somebody in the background you now have to pace yourself against Tony. Here is a list of the workouts.

Don’t have P90X Yoga X? Then get the “Fountain of Youth” or “Yoga MC:2”. Missing P90X Chest and Back? Then get “30/15 – Upper Body Massacre”. I have done the 30/15 workout and will say its one of the hardest workouts Tony has come out with. Its 6 or so sets of 30 different pushups then 15 different pull ups for an hour. My arms were on fire. Tony even has to take a break.

Missing P90X Ab Ripper X? Then get “Killer Abs”. Thats one of my favorite ab workouts. Tony combines some of the Power 90 and Ab Ripper X moves into this one. My abs are sore for at least two days after this. Those workouts and a couple other ones came in the original Tony Horton 1 on 1 Volume 1 series that I own. Most of the workouts titled P90X One on One are actually P90X2 workouts.

I’m sure you get how this goes from here. Find something that’s similar in name to the disc that doesn’t work/is scratched/broken/lost and buy one that has a similar name. Get A P90X One on One Workout.

What About Buying P90X Workout DVDs On eBay, Craigslist, or Amazon

If you are a savvy internet shopper than you have probably found yourself comparing prices at a online retailer, getting the price and then heading over to eBay to see if you can save a couple dollars. I don’t blame you, I do it to. What I want to do is tell you why not to “Buy P90X DVDs on eBay.”

The P90X DVDs you are finding on eBay *might* be frauds that are bought over from China and listed for sale. These replicas do not come with the nutrition plan, workout calendar, or fitness plan. Many of them are low quality and some are not even in English. There have been a number of reports where people have paid for P90X through their PayPal account and never got the DVD. It then became a hassle to get their money back.

There are people who bought an original copy of P90X and are now selling it on eBay. What I have found in these cases is these people never did completed P90X and are outside of the 90 day money back guarantee. All they want in this case is to get some money back. In this case, go ahead and buy if it is a good deal. Make sure it says in the listing it was original bought from Beachbody or a coach.

Beachbody Coaches are not allowed to sell P90X DVDs on eBay or Craigslist. Beachbody does have a merchant account with Amazon and sells on there. The prices are the same there as at the Beachbody store. Coaches who do try to sell anywhere outside of their coach account will be contacted by the legal team from Beachbody and have charges brought up against them.

I recently talked to a guy who was buying the P90X DVDs from China and listed them on eBay. He was contacted by Beachbody and told to stop or risk getting sued. They took it one step farther and contacted eBay and had his account suspended. He did not know he was doing anything wrong.

Original P90X Packaging — What P90X package looks like from Beachbody.

So now since you are a informed consumer you know that it makes sense to buy from Beachbody directly. Back to the matter at hand. I can’t make you not buy P90X on eBay. If the listings do look like the photo above just be careful. Its very easy to photo shop a picture and sell you something different.

Buyer Beware

You might have seen random websites selling P90X for less then $119.85. Be aware that there are a lot of scams going on and people are getting ripped off. All of the links on this site send you to Team Beachbody. Better to buy P90X from the real site instead of gambling on a fake site and not getting anything.

If you really want to take the risk of buying a fraud or a inferior product I must say that you are missing out. If you think you are getting a great deal then you might as well take it one step farther and sign up for a free Beachbody account.

I Recommend Buying P90X As A Beachbody Coach

How the Coach program works is you pay a one time fee of $39.95 to get started. This covers them setting up your website and your Coaches packet. After the first month there is a $15.95 monthly cost to stay in the program and you can cancel at anytime. Beachbody handles the orders, shipping, customer service, and pays you weekly. If you decide in the first 30 days that you want to quit, return the materials they sent you and get your $39.95 refunded minus shipping fees.

You probably don’t want to pay $39.95 to get started or the $14.95 a month and I understand. I was skeptical at first to. Then I thought about a couple things. My last gym membership had a $200 enrollment fee and was $59 a month. It was a nice gym so it might seem high. My problem was that I would get bored and it was because I was not an expert in physical fitness.

The gym did offer personal trainers for $80 a session. That’s for one time, not for a month. I never hired one because it was too expensive. Without knowing any better I could never get out of the same workout routine. Then I decided to buy P90X after a friend recommended it to me. Not only did I get great results but I learned about fitness.

Beachbody has six 90 day workout programs getting people great results right now with more coming. You are buying a personal trainer like Tony Horton for $89 for 3 months (or longer) instead of for one day. You will no longer need the gym membership and if you think about it you are coming out ahead with your discount when you sign up to be a Beachbody Coach.

Save 25% on supplements, protein bars, meal replacement shakes, and exercise gear. I hope you see the value in that even if you do not want to pursue it as a business. If you want help in the business aspect feel free to contact me as I am helping people do it for free.

When you sign up you get a one time offer from Beachbody to buy 6 of their best workout dvds and accessories in a “Showcase Pack” (discontinued).

The workouts you get are P90X, Power 90, Yoga Booty Ballet, Turbo Jam, Hip Hop Abs, and Slim In 6. You also get a set of their B-Line Resistance Bands, weighted gloves (great for the cardio workouts) and a squishy ball. All of these retail for $446.

If you want to see for yourself go to the Beachbody Store again and check out the retail prices. You will get all of these for $199 when you become a Coach. That is a saving of $446 – $199= $247. This is the best deal available from Beachbody. After you sign up, go into your store and buy the pull up bar and recovery drink with your 25% discount. Doing this is a investment for your health. There are a lifetimes worth of workouts for anybody in there. Here is a photo of what the Showcase Pack I got looks like. You will get the same when you sign up to be a coach.

If P90X is too extreme for you then return it and get something else. P90X has a 90 day money back guarantee. If you need help choosing one then let me know and I can help you pick one.

In summary:

You Can Buy P90X These Ways

P90X = $119.85 + S&H at the Beachbody Store

P90X = $89.89 + S&H for a Beachbody Coach – This Is What I Do

If you are sharing or borrowing P90X with a friend or family member then sign up for a Free Beachbody Account. You can win daily cash prizes worth up to $1,000 and a annual $250k prize. I hope this clears up any questions you might have about trying to buy P90X.

How To Use A Gift Of Equity To Your Advantage

August 6, 2008 - Updated January 5, 2018

Many parents will have paid off their house or owe little on it and decide to give the house to their kids to help them get started with their lives. Ok, so maybe they do that.

Instead of charging the kids full price, they sell them the house for what they owe on the mortgage or for a much smaller amount that its worth. This is called a gift of equity.

If you (the kid) are in a position to take over the house and make new mortgage payments then this article is not really for you. What I am going to discuss is for those who are getting the gift of equity but have credit card debt or want to remodel the house but don’t have the cash to do so.

Step 1

It starts with you (the kid) calling a mortgage company and telling them you are getting a gift of equity from your parents. The mortgage company knows the house is worth more but when you get qualified on the loan you are getting qualified at 100% LTV (loan to value) of the house. When this happens the kid will be (probably) charged PMI (private mortgage insurance) on top of their mortgage payment.

Remember, the mortgage company goes off the sale price of the home when purchasing. Not what its worth. Unless you are willing to put 20% down from the sales price to get rid of PMI then you will be paying it.

In this scenario you do not want to put any money down. Whats most important is getting in the house.

Guidelines change with mortgage companies and some may still require you to put some money of your own down even with the gift of equity. Find a mortgage company that allows you to put the least amount down.

Congrats. You’re a homeowner.

Step 2

Let’s say you received a 50% gift of equity in the home. And you feel comfortable taking out a new loan up to 80% of the value of the home which removes PMI and gives you enough money to pay off the credit cards and for the remodel. You now need to refinance the mortgage you just took out.

Call up a new mortgage company around the time you receive your first payment. Should be two weeks or so after closing. Make your payment of course.

The reason why you do not want to call the original mortgage company back is because it will ruin one of the two ways mortgage companies get paid. Which are collecting interest or selling your loan on the secondary market.

When banks sell your loan there is an agreement that if the homeowner sells or refinances within four months of the loan closing than the mortgage company that originated the home loan must pay back the proceeds to the larger bank that bought the loan. This is called the “recapture period”.

If you tell the original mortgage company you plan on doing this there is a chance they will not do the mortgage for you in the first place. They would be wasting their time on you.

They will be forced to give the money back and their commission. Be expecting a call from an angry loan officer wondering why you are doing this. They will find out because once you get in process with the next company a pay off letter is sent to whoever holds the mortgage note.

The new mortgage company does not care that you just closed on the loan a month prior. They are in business to make money and here is an opportunity to do so. And that’s what you do. You start the refinance process with the new mortgage company.

You know what the home is going to appraise at because an appraisal was done when you bought the home a month prior. This gives you exact amounts to work with in regards to paying off your credit card debt and money available for remodeling.

What will also happen is the PMI you were paying with the first loan will go away because you will now be using the appraised value of the home and not what it was sold to you at. In some cases you might see your payment go down even though you are borrowing more.

Potential Hiccups

When looking for your new mortgage you may find some companies will not use the appraised value until 6 months after you bought the home. They call this “seasoning”. Basically, they use the purchase price until you’ve been in the home for 6 months.

Its a way for the mortgage companies to cover their butts. Fear not, you should be able to find some company that will refinance your mortgage a month after you bought the house.

You may run into the same issue if you bought the home with a “Jumbo Loan” or with a regular 30 year fixed and a Home Equity Line Of Credit (called a piggyback loan).

Summary

It’s extremely nice when someone gives you a gift of equity to get in the home. It can give you a big head start in regards to your financial future.

The only downside to having to refinance your home again in the scenario I outlined above is you will have to pay closing costs again. Of course the mortgage company will roll the closing costs into your loan so you do not have to come out-of-pocket with any cash.

Mortgage guidelines change all the time and you might be able to find a mortgage company that will use the gift of equity to consolidate the credit card debt and give you the money you need to remodel at the time of purchase. That would save you a ton of time and effort going through this process again.

It might be best to tell a mortgage company or two about using the gift of equity to do those things when trying to purchase to get a feel for what mortgage companies are doing at the time. If they will not do it then you will have to do what I wrote above.

Why Mortgages Get Denied In Underwriting

August 5, 2008 - Updated December 12, 2017

It is extremely frustrating to get a phone call from the mortgage banker you just spent two hours with picking a mortgage, signing application documents, and emailing or faxing your bank statements and pay stubs with to hear your mortgage was denied in underwriting.

I can assure you from being a mortgage banker that it’s a phone call I did not want to make. There goes a commission for me, wasted time for both of us, and the likelihood of us working again in the future along with you sending referrals is slim to none.

Why It Happens

Typically a mortgage banker will know as soon as you send over your documents if you will be approved on the loan. They will take a couple of minutes to verify everything you told them over the phone. An experienced mortgage banker will be able to spot things right then and there if things are matching up. Inexperienced ones may miss something but if everything looks good they send your info to the underwriting team who start to process your loan.

In most situations the underwriting team will know if the loan is moving forward and will be denied.

The difference between the mortgage banker and the underwriter is the mortgage banker puts ranges of your income and assets on the application. Underwriters put in exact numbers and re-approve you based on those exact numbers. Sometimes the underwriting system does not like those new numbers.

These are typically what the underwriting system will now say to deny your loan.

Income – You don’t make as much money as you say you did. Or maybe you do but you have too much debt and its causing your debt to income ratio to be too high.

Assets – You don’t have as much money as you say you did on the application.

I have seen instances where 1% less income and 1% less in assets has kicked back a denial. What I recommend during the application process is to be conservative with your income and assets when talking to the mortgage banker as they will get exact numbers when you send your documents in.

Credit Score – The mortgage banker will know this before it gets to the underwriters. After putting in the exact numbers you sent with your documents, the underwriting system may not like those numbers if you have a low credit score.

Appraisal – If you are doing a rate/term refinance (not taking cash out) you might get lucky and the underwriting system will kick back a “Property Inspection Waiver”. This means no appraisal is needed.

For a couple of years mortgage companies allowed “Automated Valuation Models” or “AVM” for second mortgages. Basically, they ran your address through a Zillow.com like system and if that value worked to do a second mortgage they would not do an appraisal either.

If you are not doing a rate/term refinance or get an “AVM” that works then the underwriting system will request an appraisal. When the appraisal gets back in, the underwriter will enter what the amount came back in at and try to re-approve the loan. If the appraisal came back lower than initially thought than the loan might be denied.

This is the #1 reason why loans get denied and there is nothing the mortgage banker or underwriter can do. In most cases the value of the house has to come back pretty close as to what was stated on the application. This is one piece of the puzzle that is out of the hands of all parties.

In some cases the mortgage company will send out another appraisal if they don’t believe the appraiser did a good job. They may even ask for a “Value Appeal” if the mortgage company sees the appraiser took comparables tens or hundreds of miles away. I had this happen with a client who lived in Vail. The appraiser used comps in Denver, some 120 miles away. Absolutely not.

Its just if the mortgage company is going to pay for it or if they make you pay for it.

Many mortgage companies make you pay up front for an appraisal and it is non-refundable. If the loan gets denied because the mortgage banker did not ask an important question then you might get your money back from them because of a mistake. If you told them the house was worth more and it came in lower than its on you.

Recently Listed For Sale – At application the mortgage banker should ask you if the house was recently listed for sale. Lets say it was but you lied and told them no. During underwriting the team will look at the appraisal. On it, the appraiser will look through the MLS (Multiple Listing Service) and see if it was listed in the past year. If so, the underwriting team will notice that and possibly deny the loan.

Most mortgage companies have a 6 to 12 month de-listing period before allowing a home to be refinanced.

The reason they don’t refinance to people who recently listed their house for sale is you might be doing this for a short term fix to consolidate debt while you try to sell the house. Maybe you can’t sell the house and by doing the quick refinance to pay off your debt you then proceed into foreclosure shortly after closing.

Mortgage companies want to know you plan on staying in the home for longer than 120 days (recapture period) as they want you to keep paying on the loan.

The only way around this is if you were trying to sell the house by yourself. Commonly called For Sale By Owner (FSBO). As long as you did not contact a realtor and you took the FSBO sign off your front lawn then you should be ok to proceed.

If you’re buying a home than this does not affect you.

Two Types Of Underwritten Loans

Manually – A manually underwritten loan has guidelines that must be met. For instance, your debt to income ratio (DTI) must be lower than 45%, you must have at least 3 months worth of assets in a bank statement, been at your job for two straight years, credit score over 660, and no higher than 90% loan to value (LTV).

Desktop Underwritten (DU) – On a desktop underwritten loan you could have a debt to income ratio of 52%, 1 month of reserves in a bank account, 90% LTV, and a 770 credit score. The computer (DU) will look at your compensating factors and determine if you are a good risk to lend to. Even though your qualifying factors do not match up with the manually underwriter scenarios, you have a high credit score which makes up for the other low factors.

Just about every mortgage company is doing Desktop Underwritten loans because of the technology in place.

The mortgage banker will send your information through the desktop underwritten system connected to Fannie Mae. If they get an approval you will be sent application documents to sign and send back along with supporting documents like pay stubs and W2’s. Be honest with what you tell the mortgage banker because if you are not the underwriter will deny you immediately.

Summary

Mortgage companies are in the business to close loans, not to deny loans. They want to do everything they can to give you the loan you want. The last thing a mortgage banker wants to do is call you back the next day and say your loan was denied in the underwriting process.

Be upfront with the mortgage company and answer every question they ask. If you do this then you are protecting yourself from having your loan denied even if your appraisal comes in where you wanted it to come in at. Work with larger companies that close a lot of loans every month. They communicate faster with their clients if something goes wrong while in process.

If your loan gets denied in underwriting it is more than likely from something you did not disclose during the application process. In some cases it might be an inexperienced mortgage banker did not ask the right question.

Underwriters have to find out if there are any back taxes, how long you’ve been at your job, if you are the only person on the deed, and if there are other liens on the property like a home equity line of credit.

If they find out that you have any of these and did not tell them ahead of time the loan could get denied for any of these too. Property and income taxes must all be brought up to date. Liens on the property including collections, child support, alimony, etc. must be paid up too.

Be aware that if your loan gets denied in underwriting at one place it will probably happen at another. Most mortgage companies follow the guidelines set forth by Fannie Mae. Take the time to address whatever reasons the loan was denied for (outside of appraisal) and you will more than likely be able to get approved soon.