Mortgage Typos Can Lead to Big Problems
A mortgage loan application filled with inaccurate information — even just a small typo — could have big consequences later on. Name misspellings tend to be the most common mistake, according to a blog post on Credit.com.
Just how much of an impact can a small error make on your application? “Let’s say your name is hyphenated — Mary-Ellen Jones, for example. Though, for whatever reason, only the first and last names are used on the application when pulling credit — Mary Jones,” notes Scott Sheldon, a senior loan officer and blogger for Credit.com. “This information is sent to all three credit-reporting agencies during the credit inquiry. The inquiry carries over the inaccurate or incomplete data the loan professional submitted on the original loan application. The reason this can create issues for the mortgage loan is because incorrect or incomplete data can cause a disparity in the calculation of the credit score, anywhere from 10 points to as much as 20 points, which is one of the biggest drivers of loan costs and interest rates.”
Misspellings of names can prompt more questions from the underwriter when the loan is being reviewed and also result in fewer than three credit scores for applications (you only need one but three scores often helps get approval for lower rates and fees), Credit.com notes.
Borrowers will want to ensure their name is spelled correctly, and that if they go by a nickname that is different from their legal name, they’ll want to make sure their legal name is what’s used on the financial documents.
Any mistakes with addresses can also pose problems. Borrowers will be asked to submit addresses of where they previously resided for the last two years. If the address provided is inaccurate, the lender may add conditions to your application to obtain clarifications and it may lead to concerns about the borrower’s occupancy — another red flag to lenders.
Source: “How a Typo Can Derail Your Mortgage,” Credit.com (June 24, 2015)