What causes a mortgage to fall through at closing?
Rob Miller reveals the most common reasons mortgage deals collapse at closing in Wisconsin — and what Realtors can do to prevent each one.
Rob Miller, Branch Manager at MadCity Home Loans, gives Realtors an honest look at why deals collapse — and how to stop it from happening to yours.
What causes a mortgage to fall through at closing?
Every Realtor has had a deal fall apart. Here are the most common mortgage-side causes — and what to do about them:
1. Major Credit Change During Escrow
Opening a new credit card, buying a car, or co-signing a loan between pre-approval and closing can tank a credit score or push DTI over the limit. I tell every buyer: do not touch your credit during escrow. Lenders pull credit again before closing.
2. Employment Change
Job loss, quitting, or switching from W-2 to self-employed kills a loan instantly. We verify employment days before closing. Remind your clients: no job changes until after the keys are in their hands.
3. Appraisal Comes in Low
If the home doesn't appraise at the purchase price and neither party is willing to renegotiate, the deal dies — unless the buyer has an appraisal contingency and chooses to walk.
4. Undisclosed Debt or Liabilities
A lien discovered on title, a child support judgment, or an IRS garnishment showing up at underwriting can delay or kill a closing. Title search usually catches these — but not always upfront.
5. Wire Fraud / Closing Funds Issue
Buyers who wire funds to the wrong account (due to phishing) or fail to wire on time can cause a same-day closing collapse. Always instruct buyers to call the title company directly — never trust wiring instructions received by email alone.
6. Lender Delay
Some lenders simply can't execute. This is why I tell every agent partner: choose your lender as carefully as you choose your clients. We close on time, every time — or we make it right.
Related Guide: Share this with buyers: What Not to Do After Your Offer Is Accepted.