What Happens if You Make an Error in Your Home Equity Loan Application
An error in your home equity loan application may be relatively simple to fix. There are two major issues that will affect how you correct the mistake: one, whether the application has been processed; and two, the nature of the error. Most errors can be fixed easily before the loan is processed. If the loan has already been processed, then you will have to determine whether your error is fixable or not.
Errors before Processing
Before an application enters the processing stage, nothing you or the lender has done is set in stone. All the aspects of your application are open to review. Simply request to withdraw your application to fix the error and resubmit it. There are two drawbacks to withdrawing and resubmitting the application.
The first major drawback is your loan will take longer to come through. You will have to reset the entire application process, so the time you waited already will be lost. The second major drawback is considering how the mistake will reflect on your responsibility and professionalism. One mistake is usually forgivable. However, withdrawing the application more than once to fix errors will be looked down upon. Instead, ensure you correct every single error the first time through.
Errors after Processing
After the loan has gone through the processing phase, correcting an error will be more difficult. You can no longer withdraw and resubmit your application. Instead, you will have to amend your existing loan quote or contract. In the worst case scenario you will have to close the loan. Whether or not you can amend the contract usually depends on the type of mistake you made.
Simple errors on an application are those items that would be subject to change in the future regardless. For example, your address, phone number or employer's contact information could possibly change during the life of your home equity loan. These items can be addressed through a simple amendment if they were entered incorrectly the first time.
Serious errors that have been on the loan application through processing can actually lead to legal troubles for you. For example, making an error when you submit your social security number can actually be viewed as identity theft. If you made an error in reporting your salary information, the lender may accuse you of loan application fraud. Since these items affect your loan amount and terms, you will not have the chance to simply amend the contract in order to fix the problem. The lender should have caught these errors in the processing phase, but mistakes do happen.
Avoiding Legal Problems
If you notice a serious error only after processing, you should contact an attorney immediately to make the legal counsel aware of the issue. Your legal adviser will likely give you steps to follow to repair the error. The most common recommendation is to submit a letter explaining the error to the lender as soon as possible. You may be able to modify the loan if the lender is willing. A loan modification can cost you a fee, but in the end it will cost you less than an accusation of loan fraud or identity theft.