The mortgage industry has undergone plenty of changes over the last few years. The two biggest deal with the increased amount of paperwork and the length of time to close a transaction. It is no secret that lenders have gone overboard protecting themselves from the mortgage issues of the last decade. While the process is longer, and – at times – more difficult, it is in many ways the same as it has always been. The core items needed to close a loan are the same, just more heavily scrutinized. Having said that, if you want to get your loan closed, you need to do your part. Here are five steps to help you bring your loan to a close faster:
1. Get Pre-approved: Most of the work on your loan application should be done before your offer is accepted. One of the first things that most buyers do when shopping for a property is to get pre-approved. Your local lender or mortgage broker will ask you about your employment, annual income, down payment amount and run your credit report. Based on these criteria, they will give you an idea of what price range you should be looking at and what your monthly payment will be. They will send you and your real estate agent a pre-qualification letter and wait until you are ready to make an offer. Instead of simply getting pre-qualified, you should ask to get pre-approved. More lenders are taking this approach when dealing with buyers. You should supply information over the phone, and provide hard documentation of said items. Doing this allows your lender to see if there are any snags that need to be worked out before the loan is submitted. If everything looks OK, they can actually submit the application and items received pending the subject property address. The process will save you weeks, and gives you an idea of exactly what you are working with.
2. Submit Everything Together: If you haven’t used lender financing since the last decade, things have changed quite a bit. Instead of just a loan application, a few forms and a contract, the requirements are much more intricate. To speed up the loan underwriting process, most banks require the full application to be submitted. This means getting all of the items from the borrower and real estate agent. If there are updated bank statements needed, you have to get those over to your lender before they can send the file over to the bank. This will be a bit more work on your end, but by waiting an extra day or two to get everything in order you will save weeks when the loan is at the bank. It is important not to fight what your lender is asking for. You may not agree with it, but it will ultimately be needed to close the loan. The quicker you can get these over, the quicker your loan can be reviewed.
3. Use Email: The borrower is much more involved in the loan process than ever before. You will know where you stand and what is needed every step of the way. One of the ways the lender will do this is by emailing documents that either need an electronic signature or verification of receipt. If you are not a big email user, you need to be. It really helps with the loan process. Without these e-signatures, the process will come to a halt. Instead of being able to quickly order an appraisal or generate closing documents, nothing can move forward. Additionally, if there are items needed, you should quickly send them over via email. This way they can just be forwarded to the bank without any delay.
4. Be Ready: You never know what the lender is going to ask for. In some cases, they need an extra month’s bank statement. Other times, they will ask for clarification on a particular deposit or withdrawal. While it may seem petty and insignificant to you, it is essential for the lender. Instead of fighting with your broker, you can speed up the process by getting these items back quickly. Before you even submit your loan, you should prepare yourself to gather any items that may be needed. Take out any previous year’s tax returns, leases and anything else you think you may need. Loan underwriters are constantly working on multiple files. Every time they ask for something else, your loan goes back to the bottom of the file. It may even be a few days before you get an answer on an item you send over. This underscores the importance of responding quickly.
5. Choose The Right Attorney: Your attorney plays several key roles in your transaction. If there are issues with the contract, they will be called in to handle them with the seller. They will also provide you with the title, title insurance and anything else that comes up during the approval. Once the loan is approved and cleared to close, they will prepare the closing documents and work with the lender. If you can’t get in touch with your attorney or their paralegal, the process will come to a halt. It is important to make sure you that your attorney knows real estate, and won’t be tied down in court all day. Spending a $100 more on a good attorney that knows what they are doing can be the best money spent over the course of the entire transaction.
The average loan closing takes anywhere from 30-45 days. With the right preparation and the willingness to react quickly, you can cut this time in half. Closing a mortgage is not as easy as it was years ago, but it also doesn’t have to be overly difficult as well. If you do your part, you can close as quickly as possible.