When it comes to getting a mortgage, the faster you can close, the sooner you get the keys to your new home - and the less of a chance there will be hiccups along the way. So how can you help the process go as smoothly as possible? To start, getting organized and making sure your paperwork is in order can be a big help.
For example, Josh Moffitt, president of Silverton Mortgage Specialists in Atlanta, Georgia points out that in the Southeast, the average mortgage closing takes anywhere from 30-45 days. But if you don't have all of your paperwork ready to go during the verification process, it can take up to 120 days.
Ready to get your home ownership process started? Here are some tips on how to close on your mortgage quickly.
Know What Your Closing Costs Will Be and What Form of Payment Your Lender Wants
Each state has different procedures for closing on a home, Moffitt says, and the process for closing in your particular state can affect how much you end up paying overall.
For example, he explains that many states are "attorney states," meaning that a real estate attorney is required to close on all residential real estate transactions. As a result, the fee for the attorney's services will be worked in to your overall closing costs.
And if you think you can just bring that old checkbook and be done with your closing costs, think again. In the past, lenders used to take a personal check for anything. Now, however, lenders typically want a wire or a cashier's check because it's faster and safer, Moffitt says. That's because when the money comes in the form of a wire or cashier's check, it's money that you can use right now - as opposed to the lender having to wait for a personal check to clear.
Find an Experienced Broker or Small Banker who Can Push the Process Along Quickly
As you know, paperwork is an essential part of the mortgage closing process. So a broker who lacks the experience to gather the necessary paperwork ahead of time can end up delaying the closing - sometimes by weeks, or even months, explains Joe Parsons, senior loan officer at PFS Funding in California.
"Sometimes a loan originator submits insufficient documentation to the underwriter, then receives conditions that must be satisfied and signed off before the loan can fund," Parsons explains. The result? Each time there's a need for more information, it adds time to the overall process.
So what can you do to streamline the process? Look for a broker or banker with lots of experience, according to Cyndee Kendall, regional sales manager for Bank of the West's Northern California and Bay Area. She explains that an experienced mortgage broker will know the documentation requirements necessary to close the loan and avoid any delays.
Parsons agrees, adding that third-party brokers and small bankers have a much higher bar to enter into the business than loan consultants working for large banks. For example, in most states, small brokers must possess a real estate license, pass two comprehensive exams and be registered with the National Mortgage Licensing System (NMLS). As a result, brokers know more about the process and might be able to work faster and more efficiently.
On the other hand, loan officers at large banks have none of these requirements, Parsons explains.
As a result, Parsons cautions: "A consumer submitting a loan application through a large bank is taking her chances that the loan consultant has the experience and training to secure the needed documentation, analyze it, and package it properly."
Include Any Seller Concessions or Repairs in the Contract
Seller concessions are costs included in the contract that the seller has agreed to pay, according to Moffitt. These could include closing costs or repairs the seller must make before he hands over the house, Moffitt explains.
While getting things paid for is great, seller concessions may also cause delays in the process.
For example, Moffitt says that anything water or electrical related that the seller agrees to repair as part of the sale is usually required to be fixed before closing. So if the seller already agreed to make those repairs and put it in the contract, it has to be done before he hands over the key.
Because of this, Moffitt says it's important to document in writing any agreed upon repairs, as well as a timeframe for when things need to be done. Otherwise, you might end up with a delayed closing because the seller isn't contractually obligated to fix anything by a certain time.
Set Up a Home Appraisal As Soon As You Start The Mortgage Process
The primary function of a home appraisal is to get a comparable analysis of other homes in the neighborhood to determine if you are buying the property at market price - a price that is consistent with other sales in the area, says Moffitt.
And it has to be done by a licensed professional appraiser set up through your lender, Kendall adds.
"You need to be aware that if you [set up] your own appraisal it will not be accepted by a lender," Kendall says.
So to avoid hassles and delays, "a buyer should order an appraisal through their lender very early on in the process so that any renegotiations fit within the appraisal timeline, which is typically 14 days," Moffitt says.
If you don't set up a home appraisal as soon as the closing process begins, it might end up causing delays later, when you're ready to close.