I keep hearing about Buyers getting last minute surprises before their loan closes, and this is something that should not happen if everyone does their job during the loan process. The reason why there are surprises are because the necessary steps were not taken, someone tried to take a shortcut along the way, and those involved in the transaction did not pay attention to conditions that needed to be met in order for the loan to close.
It all starts with a Buyer being Pre-Approved for a loan correctly. You can read a blog that I wrote recently "It Is A Great Time To Buy ........... Get Pre-Approved Today!!!!", where I identify the necessary steps that must be taken from the very beginning. If a Buyer is Pre-Approved correctly it will eliminate most of the surprises along the way, and set the stage for a quick and smooth transaction.
The second most important step in making sure that there are no surprises, is for the Loan Officer to take a complete Loan Application (1003) and ask ALL the questions, especially those that some times LAZY Loan Officers and Brokers overlook. I am referring to the YES and NO questions on Page #4, you can read about this on my blog "Questions That Loan Officers/Brokers Have To Ask!!!". These questions may seem silly at times, but not asking anyone of them can cause major problems later.
The third is making sure that you have a completed Good Faith Estimate (GFE), and Truth In Lending Statement (TIL). The Good Faith Estimated is particularly important to have as soon as possible in the process so that everyone has a very close estimate of how much money the the Buyer needs to have to purchase the house. Being short of funds to Close at the last minute is not something that anyone wants to be surprised with.
The forth thing to pay attention to and make sure that you have is a Rate & Point Lock Letter, which I covered in this blog "Rate & Point Lock Letter…………Got To Have One!!!" You want to make sure that you know what your interest rate will be, and any points associated with it before you get to the Closing Table.
The fifth and final one that I will cover here is pay very, very close attention to the conditions listed on the Commitment Letter once the loan is approved in Underwriting, everything that will need to be done before a "Clear To Close" is given is listed on the Commitment Letter, and these conditions need to be taken care of as soon as possible. No one should be surprised by anything that will be needed before the loan can close, ir they took the time to read the Commitment Letter. It is everyone's responsibility to know what is on it, and to stay on top of each other until everything on it is done.
Can there still be a chance for a last minute surprise if all this is done, yes there is, anything is possible, and never say never. But if everything that I have listed above is done, the chance for a surprise will be 99% eliminated, and only something that is very odd, or that could not have been anticipated will cause a surprise at that point.
How can you ensure all this. Make sure that you are dealing with professionals that do this FULL time, and that you can see FACE to FACE. Professionals that will be there every step of the processes, and that can be reached quickly whenever a question arises.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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Hi, Karen! Thanks for re-blogging this. We can never have enough vetting to ensure that our transactions close.