Want to close fast? There are certainly lots of things people can do to accelerate the closing process. A fast close can help with the negotiation process. Sellers who see that someone has already applied for a mortgage means the buyers are not only serious about an offer but have taken the extra step and received a preapproval. Someone who says they have a preapproval means they can close much faster than another buyer who isn’t approved. Being prepared for a fast close means your offer might be more competitive. A fast close can be appealing to the sellers and might sway their decision in your favor.
What Borrowers Can Do for a Fast Close
For those who want or need a fast close, there are some things borrowers can do to help with that effort. The first is to understand what’s being asked for during the initial documentation process. Perhaps one of the most common ways closings get bogged down is because the borrowers don’t provide the initial paperwork as quickly as possible. In the very beginning, I’ll provide you with a list of items needed to process and document your loan. The sooner that documentation is sent over, the sooner we can get you to the settlement table. Loan approvals are performed in stages and with missing documentation the loan file just sits and can’t move forward.
What items are needed at the outset? In general, you can expect to provide documentation verifying gross monthly income along with showing at least a two year employment history. For self-employed borrowers, it means providing the last two years of both personal and business income tax returns along with a current year-to-date profit and loss statement. Bank and investment statements showing there are enough funds to close the transaction will be needed. I’ll provide you with a personalized list of items needed but in general income and asset verification will be verified.
Once the initial documentation has been submitted the loan goes to a loan processor to help prepare the file for submission to the underwriter. The processor reviews the information submitted and if anything is missing, the processor will request the additional items. It’s important that when such a request is made the request is promptly fulfilled. Once documented, the loan then goes to the underwriter. The underwriter is the person responsible for making sure the loan file complies with program guidelines for the selected loan program.
Be Prepared to Answer Lender Question
The underwriter can issue an approval but at the same time may ask for more documentation. One of the more common requests is updated documentation. Credit documents within a loan file must be no more than 30 days old. Many times, this request is made simply to make sure the loan is in compliance. At this stage however, borrowers might take some time to respond to the request for updated documentation but doing so will slow down the approval process. Just as in the beginning, borrowers should get the needed information as quickly as possible.
Finally, choose a loan program and stick to it. We know that things can change and we can adjust accordingly but when and if possible, don’t change loan programs after the loan has been submitted and underwritten. Replacing one loan program with another can set off a new wave of documentation requests. Switching from a fixed rate loan to an adjustable rate mortgage is a good example.
The bottom line is to communicate. You need to be proactive throughout the loan process and not just at the very beginning. Filling out an application and hitting the ‘submit’ button is just the start of the entire transaction and a lot of wheels begin to turn immediately after submission. If you’re not sure of what’s being asked for, let me know. When the communication channels are active and wide open, you’ll close sooner rather than later.