Keys To A Fast Mortgage Closing
A successful mortgage application involves a partnership between lender and borrower.
It’s your loan officer’s job to help you choose the right loan product, take your mortgage application and make your case with the underwriters.
Most mortgage applications have at least one issue to resolve — some small, some large – but most are fixable.
Here’s where you can help. Your loan professional can probably get your loan wrapped up very quickly if you avoid these mistakes that mortgage lenders say slow down the approval process.
1. Avoid Misstatements And Omissions
The following are a few situations you should mention to your lender.
- Your mother pays your rent
- You pay child support
- You rent out a residence that you call your vacation home
- You quit your job
Mistakes can happen by accident, but some applicants leave things out or spin them because they think it will help them get approved for a mortgage. That’s a bad idea, for three reasons.
- Your lender will probably discover your secret
- You are responsible to produce truthful, signed statements
- It’s better to deal with issues up front rather than late in the process
Chances are, if your loan agent knows what your issues are, they can be dealt with before the mortgage underwriter sees the application.
No loan officer wants to get a call from the underwriter asking about an undisclosed debt or credit problem. You need to trust them to do their job, and they need to be able to trust the information you provide.
2. Stay Available
Mortgage loans are typically huge sums of money.
If you’re asking a lender to advance you a six-figure sum, there will probably be questions and requests for you.
It’s important to cooperate because everyone involved is under a deadline. Loan officers, underwriters, and loan funders all work together to complete your transaction. Delays on your part can gum up the entire system.
Typically, an underwriter receives a package and reviews the application, income, assets and credit documents. There will likely be questions (for instance, “Is this bonus an annual event or a one-time thing?”) and requests for additional documentation like cancelled checks proving on-time payment.
Your loan officer asks you for these things and then moves on to the next file.
If you don’t touch base, your file goes into limbo. When you do submit the requested items, they go to the underwriter, who reviews them in the order they’re received. That may take several days. If there are follow-up questions or requests, the whole thing starts again.
If it takes you five days to get back to your lender every time there’s a request, your loan is unlikely to close on time.
3. Don’t Make Major Changes
When you apply for a home loan, most of what you disclose on your application will be verified, and before funding, the entire thing will get a final quality assurance check.
Changes to your profile after you’ve been approved and everyone’s ready to go can delay or even reverse your mortgage approval. Here are the top changes that can blow a home purchase or refinance:
Quitting your job
Changing jobs isn’t always a risk.
You can move up in your career during a loan application.
But, only take a new job with similar or higher pay and responsibilities. Also make sure you stay within the same industry.
Taking on new credit
More debt means additional expense. Your debt-to-income (DTI) ratios will have to be re-calculated. Even if you don’t open a new account, the lender will have to take time to verify this.
If you do take on new credit, such as a houseful of furniture, your minimum payments will increase, changing your DTI.
Even same-as-cash offers add to your debt profile. The lender must determine what payments will be, and count those as if you owe them today.
Altering the downpayment
If you say your downpayment coming from cashing out stocks or other investments, your lender will verify that you own the assets.
But it will also need proof that you sold the shares and the money is in your checking account. Once that’s been verified and approved, don’t change where your downpayment is coming from.
Switching loan programs
It seems simple enough to be re-approved under a different loan program. However, each loan type comes with a separate set of rules.
An will be approved differently than a VA loan. A conventional Fannie Mae loan will be underwritten to an altogether separate rule book.
Changing loan types mid-stream can add days or weeks to your approval process.
You and your lender should work as a team to close your mortgage. Avoiding these mistakes can make that happen.
What Are Today’s Mortgage Rates?
Mortgage rates are low, especially for those who can close their loans quickly. Fast loan closings happen when the applicants is upfront about their situation, and on top of lender requests.
Get a rate quote for your mortgage. No social security number is required to start, and all quotes come with access to your live credit scores.