Buying a home can be both exciting and stressful. It’s not something most of us do very often, so there’s a lot of unfamiliar territory to cover in a short time. With an experienced Realtor® and a knowledgeable mortgage loan originator (preferably with First Choice Loan Services Inc.!), you’ll have guidance throughout the process. However, you have a very important part to play if you want a smooth loan process and an on-time closing. Here’s how you can avoid these 7 common closing delays.
Missing Important Deadlines. The minute you go under contract, the clock starts ticking. There’s a closing deadline in that document, and there will probably be financial penalties if you miss it (unless your Realtor® can re-negotiate later, and that’s never a fun process). In addition to financial penalties, there will probably be a domino effect. The sellers need the funds from the sale to buy their next home. You have a lease that’s expiring. The moving company is booked for your moving day. All of this means one thing: When your mortgage loan originator, or loan processor, asks you to eConsent, or sign your application, or go online to acknowledge your Closing Disclosure, please do it right away.
Slow Document Submission. This follows from the previous point. Your mortgage loan originator will give you a list of documents needed for your loan. Seems like a lot, doesn’t it? Surely the lender doesn’t need all of it? The answer is yes, all of it is important, and if you drag your heels, you’ll slow the process. Underwriters need those documents to evaluate your loan application, so review the list right away, discuss any items that are unclear with your loan originator, and submit everything ASAP.
Changing Jobs Or Compensation Type. Lenders like stability. They are lending you money and want to know that you are going to repay it. They lend based on set criteria, and they don’t like changes during the time when your loan application is in process. They really don’t like it when you take a different job or your compensation method changes (such as moving from salary to commission), even if you aren’t changing employers. If a job or compensation change is in the offing, talk to your loan originator immediately. It could derail your loan completely.
Taking Out A New Loan Or Applying For More Credit. That credit offer from the home improvement store is tempting, isn’t it? Your new house will need some work and a zero percent offer sounds good. Maybe your car dealer has a great year-end offer on the vehicle you’re craving, and the loan won’t add that much to your monthly expenses. Stop now. Do not make a move without discussing it with your lender. By taking out more credit or adding a loan, you may affect your credit score and your debt-to-income (DTI) ratio. The result could be a more expensive loan or no loan at all.
Large Unidentified Deposits. You sold your antique horseshoe collection on eBay. Your auntie is happy that you are buying a home and gave you money for new furniture. Now you have large unidentified deposits in your bank account and your lender needs to know where they came from. Lenders have to “source” large, unusual deposits because they need to know that you aren’t laundering money or using funds from other illegal activities. The government takes a very dim view of such things. As with everything else, talk to your mortgage loan originator about any windfalls before they become an issue.
Property Not Ready. This is not under your control, but you can keep tabs on what’s happening by working closely with your Realtor®. Did the home inspection reveal items that need repair or replacement? Are there any issues related to title that must be resolved? You’re not being a pest if you ask for progress reports on these matters; you’re being a pro-active client.
Funds Not Available. You’ve done everything your mortgage loan originator and Realtor® asked you to do. The closing date and time are set. The final walk-through was fine. You grab your checkbook and head for the closing. Oops. Not so fast. If you need to bring funds to closing, you can’t write a personal check. You’ll need to provide funds in the form acceptable to the title/escrow company, and they may be required in advance. If you need to liquidate stocks or transfer funds, allow time for that, too. Make sure you understand what you need to do by discussing your closing funds with your lender.
As you’ve been reading, you may have noticed a theme. Communication is the key to a smooth home loan. Whatever comes up, whatever your questions, talk to your Mortgage Loan Originator and your Realtor®. You’ll be glad you did!