Closing On Your Home
When you enter into a real estate purchase contract, both the buyers and sellers agree on a tentative closing date. Normally, the closing date is set between 30 and 45 days of the purchase contract. However, many real estate agents will tell you that delays in mortgage loan closings happen due to the buyer’s mortgage lender and an extension is required. Delays in mortgage loan closings do happen and many times delays in mortgage loan closings can be avoided. Your mortgage lender will need the mortgage loan applicant’s as well as the cooperation of all parties involved in trying to meet the targeted closing date and avoid delays in mortgage closings.
Processing Right Way Avoids Delays In Mortgage Loan Closings
Your mortgage lender should submit your complete mortgage loan package and process it the right way the first go around to avoid mortgage conditions. When you get a conditional mortgage loan approval, you will get items on conditions that need to be met in order for your conditional mortgage loan approval to be valid. Examples of submitting your mortgage application as complete as possible to the mortgage underwriter includes providing all of the information that is required by the mortgage loan underwriter. For example, if you are divorced, a divorce decree will be required. Many times, divorce decrees are incomplete and mortgage loan underwriters need every page from the initial filing petition to the complete finalized divorce decree. Any missing pages will be conditioned and the mortgage loan underwriter will most likely condition that on your conditional mortgage loan approval. Another example is letters of explanations for prior derogatory credit.
Letter Of Explanation
Every derogatory credit item on your credit report needs a letter of explanation on the circumstances why you went into arrears. Bankruptcy papers require all pages, from the initial filing petition to the discharge papers. The same goes with foreclosure and short sale documents. Foreclosure paperwork, including the recorded date filed in your county’s recorder of deeds office needs to be provided as well as for the HUD settlement paperwork if you had a prior short sale. All bank statements needs to include every single page of the past two month’s bank statements including blank pages. 401K statements needs to include your withdrawal agreement in the event you need to make a withdrawal or borrow against it.
What Happens If You Are Buying A Flip?
In the event if you are purchasing a home that the seller has purchased it within the past year and are flipping it for a profit, you need to make sure you tell your mortgage lender about. Situations like this will cause delays in mortgage loan closings because there are rules when it comes on home flips where two appraisals are required. There are many situations where delays in mortgage loan closings happen because at the last minute, the mortgage lender finds out that the subject purchase property is a flip and a second appraisal is ordered at the last minute. Nothing is wrong with purchasing a flip, however, there are strict rules and regulations when it comes to flips and many mortgage lenders do not catch this fact until the file goes through QC, Quality Control, just prior to a clear to close issuance.
No matter how perfect your mortgage application has been processed and submitted to underwriting, mortgage conditions are inevitable and do come up. The minute you get a list of conditions the mortgage loan underwriter is requesting, please submit whatever conditions they ask for as soon as possible. You need to realize that once your mortgage conditions are submitted to underwriting, the mortgage loan underwriter will not drop whatever he or she is doing and it normally takes 24 hours to 48 hours to clear mortgage conditions. If the conditions requested is not submitted all at once, your file will get kicked back and this will cause delays in mortgage loan closings because when it gets re-submitted back to underwriting, the 24 hour to 48 hour waiting time restarts. Not submitting conditions on a timely manner to underwriting is one of the biggest reasons in delays in mortgage loan closings.
Another main reason for delays in mortgage loan closings is when the appraisal comes back with a lower value than the purchase price. Appraisal rebuttals take time and so does re-negotiation of the purchase price. Delays in mortgage loan closings due to low appraisals do not happen often but it does happens. I strongly recommend that you order the home appraisal as soon as possible in the event your run into home appraisal issues.
There are many mortgage lenders that once a mortgage loan underwriter signs off on a mortgage loan approval, the whole mortgage package goes through their Quality Control department prior to a clear to close. The Quality Control mortgage underwriter will review the whole mortgage loan package for a final time before issuing a clear to close which is the clear to fund the loan where the mortgage lender then sends the mortgage loan package and the wire to the title company. Quality Control normally takes 24 to 48 hours depending on the mortgage lender. Very rarily does anything drastic happen during the Quality Control Review Process but in the event if it does, there can be delays in mortgage loan closings.
If everyone is on the ball from day one, there should be no delays in mortgage loan closings. However, the mortgage lender cannot do everything by himself or herself without the cooperation of the buyers, sellers, realtors, attorneys, title company, and third party vendors such as appraisers, insurance companies, and other vendors involved in the real estate transaction.