Tips For a Smooth Mortgage Transaction
Getting a mortgage is actually a pretty simple process if you avoid a few common mistakes.
- Allow enough time to get it done. People ask me all the time how long it is going to take to close. That is an almost impossible question to answer, since your lender has almost no control over that. Keep that in mind when your Loan Officer at a different lender promises they can have it done in 2 weeks. What else are they lying to you about? There are dozens of people who all have to complete their jobs before your loan closes, and the vast majority of them do not work for your lender. The two parties most commonly responsible for loans not closing on time are the borrower themselves and the appraiser. We can't make you do anything, and we're forbidden by law from contacting the appraiser. In fact, we're not even told who the appraiser is. In most areas I tell people to allow 30 days after the date we start the loan, not the date you write the contract. We aren't going to start on the loan until you have the house under contract and are done with your inspections and repair negotiations with the seller. That process usually takes 1-2 weeks, so figure on 45 days from the date you make your offer for closing. If everything goes smoothly we can get them done much faster, but things never go smoothly when the loan has to close in 2 weeks. Murphy's Law seems to control in those situations. Take the stress out of the situation, and allow plenty of time.
- Don't delay your own transaction. We have a really difficult time feeling sorry for people whose loans close 1 or 2 days late after they spent 2 weeks ignoring our requests for required documentation for their loan. When your lender asks you for something, we need it immediately, not when you get around to it in a week or two. At the beginning we can't order the appraisal until you send us what we requested, and the appraisal is usually the last thing we are waiting for, so the longer you delay us from ordering it, the more likely it becomes your closing will be delayed.
- Don't surprise us at the last minute with contract amendments or REALTOR contributions. We structure your deal based on the contract you supply us, and the terms of that contract have to be included in the appraisal report. We need to know about everything at the beginning, or your closing is almost certainly going to be delayed while we restructure and redisclose your loan, satisfy federally mandated waiting periods, and get the appraisal corrected.
- You cannot receive money back from the seller or your REALTOR. Sellers and REALTORS can give you money for closing costs and prepaids, but that is it. You cannot receive repair allowances, carpet allowances, rebates, or anything else either at closing or after. I know the REALTORS here in San Angelo love to structure deals this way, and some of the Loan Officers will go along with concealing it from their employers, but doing so is a felony punishable by 2 to 99 years in jail and up to a $10,000 fine. If there is something wrong with the house, the seller needs to fix it prior to closing or you will have to pay to fix it later from your own funds assuming it isn't so serious (bad roof, structural problems, etc.) that the lender requires it to be fixed before closing. If you don't believe me, call your lender's corporate office and ask their Compliance Officer if the $15,000 the seller is giving you back after closing to fix the bad roof is ok with them, and be sure to tell them their Loan Officer said it was perfectly fine. 20 minutes later your loan is going to be denied and the LO you were working with will be looking for work.
- If possible, don't plan on moving the day of closing. There is nothing that says you have to move in before the ink is dry on your closing documents, and there is nothing more stressful than trying to do it all on the same day. Plan to close early in the week, and move in over the weekend. You will be much happier and things will go much smoother if one thing going wrong isn't going to be a complete disaster.
- Don't try to close at the end of the month. Everybody wants to close at the end of the month because it slightly reduces the amount of money they need at closing. Two problems with this theory. First, if you close the first week of the month and we make your first mortgage payment due on the 1st day of the following month, you will actually need even less money at closing then had you closed the week before. Second, since everybody is trying to close at the end of the month, it is difficult to get things done since the title companies, closing departments, attorneys, moving companies, etc. are all swamped.
Just a few tips to make what can be a stressful process go a lot smoother.