Ask ten mortgage people that question and you will likely get ten different answers. In fact ask me on ten different files and you'll get ten different answers! Just a few weeks ago I easily closed a refinance in eight days and a purchase in 13. Yes, 13 days. Can it happen today? I don't know - we'll have to try it and see! I am currently working on a closing with Lane Bailey that has been going for well into six weeks. In fact it has been in underwriting over two weeks. To blame it on underwriting would be wrong. To blame it on the borrower would be wrong. To blame it on the seller would be wrong. To blam it on Lane or me would also be wrong! Heck, in fact, Lane, the other agent and I are probably the only ones with no guilt in the process!
Lenders today are reeling from seeing the FBI and FTC swoop into Taylor Bean a few weeks ago and shut them down. When a top 20 nationwide lender is abrupted mid-process it makes everyone else take notice. It also scares everyone and makes them take every line, every blank, every disclosure, every title change, on every form and document very seriously. Just six months ago there is no doubt this file would have closed in a week from the time it hit underwriting.
On the other hand we have a file that has been in underwriting 3 days and the docs will go out tomorrow for a closing. To me the file that is closing the fastest looks the most frightening!
Here is where you have to be careful: there are a lot of reports of people saying they can close in 10 to 15 days. The truth is I can say that, too. Like I said, I have one file in underwriting for 3 business days and it's ready to close. I have another file in underwriting since the 23rd of September and it's in review. Some people will say lenders are faster than brokers or that brokers are less likely to get a file closed. Here again we have to be careful about what we say and what we believe.
Over the last few months I have read several posts on closing times. Most of them agree it is going to be taking longer to close a loan than it did 12 months or more ago. Underwriting times are not getting faster - in most cases. While some mid-level lenders are bragging about 24 hour underwriting times (and that may be true) the larger banks are increasing closing times.
ENOUGH KEN! GET TO THE POINT!
The point is it's all about setting expectations up front. Sure, Ken may be able to get your file closed in 2 weeks - my new company, a soon to be federally chartered bank - is promising 22 days start to finish at the longest - but Ken may also be able to close your loan in 8 business days - which does not include Saturday and Sunday or banking holidays (the shortest possible under the new MDIA -Mortgage Disclosure Improvement Act).
Many are also affect by the HVCC which also went into effect in the last several months - effective May 1, 2009 - where appraisals must be order through an AMC (Appraisal Management Company). I don't want to get into an exchange about HVCC again because it has been well debated all over the Internet, just Google it if you are still unaware. I will tell you this: It once took 3 days from order to receipt of an appraisal. I have recently had it take as long as three (3) weeks. In the end we discovered the appraiser drove over 80 miles to do the appraisal and still did a crappy job on the valuation (went beyond the subject area, did not brackett the property) and the lender still called for a review.
COME ON KEN, STOP MOANING! HOW LONG DOES IT TAKE TO CLOSE???
Safely you should be saying foty-five (45) days and be prepared for more. Can it be done faster? Sure! Anything can happen! Forty-five days is not from the offer date it is from the date you have the fully executed sales agreement in the hands of the Loan Officer. This article is about setting expectations. And I've got to be honest with you, if even one of you replies and says, "Well MY lender says ..." - don't bother. You didn't read the article. Today is a different world in the mortgage business. It's nothing like it has ever been in my years in the business. Rates have been higher, values have been lower but never in my years have files been so oddly handled. I don't care if it's in-house underwriters or out-house :) underwriters. Things are different today. Lenders who are "getting around the process" are also getting investigated and some of them are getting shut down.
So, safely you should be able to tell you buyers 45 days from receipt of the fully executed contract then hope for a wonderful surprise. It's a heck of a lot easier than telling them 15 days then having pie on every face in the industry. It never hurts to tell them things do occasionally happen to push beyond the 45 days.
Welcome to 2010 my friends - here comes major changes to FHA, YSP and SRP :)
DON'T WORRY! BE HAPPY! DRINK YOUR KOOLAID!
How to speed things along:
Get ALL the correct documents up front - no backtalk from the client. Get the SIGNED TAX RETURNS Get the BANK STATEMENTS/ALL PAGES (don't omit page 13 because it "didn't have anything on it") Get the PAY STUBS - if the client doesn't have them strap in for a very bumpy ride Anticipate the 4506-T because the lender is going to pull them! If there is gift money make sure you have a paper trail including the gifter's bank statements If there is no rental history make sure the rent-free letter is accurate Make sure the buyer will have the correct amount of reserves AFTER the closing If the seller is a CORPORATION be prepared for the process to be bumpy Make sure the SELLER has MORE than enough seasoning and if the property has increased in value since purchase (regardless of the amount of rehab) be prepared for the process to be bumpy
Be careful about what you learn at seminars and workshops REGARDLESS of the name on the sign.
Call me - we can talk about mortgages, social media, golf or whatever. 678-439-8683 just say hi!
Ken Cook - Web coder (I write the programs that make the whole world zing!) (678) 439-8683 Anything your mind can conceive I can create - online that is!
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NOTICE: I have been writing in this blog since July 2006. Some of the older articles may contain information that has changed. Please check the date and phone me if you have any questions.
37 Comments
on How Long Does It Take To Close "Today"?
OCT
06
2009
Ken,
Great post. I have been hearing 45 days from everyone I have been using to close an FHA loan. If they get it done faster great. It is always difficult if you set the expectation to closer quicker and then have to go back and have both parties sign an amendment to extend the closing date. Thanks for the info.
Ken: In my opinion ... it takes too long. Of course, it helps to work with a lender who is really on top of things and who communicates .... communication with the agent is critical!
"So, safely you should be able to tell you buyers 45 days from receipt of the fully executed contract then hope for a wonderful surprise"
I remember when we regularly said about 30 days! Planed on 3 weeks. Today I'd hate to say anything!
People only remember what they want ot hear, I remember a guy asking the time then complain two weeks later that we weren't closed claiming I'd said 10 to 30 days.
My best, applaction at noon Monday, closing 8AM Friday! Saving the man $1,000,000 then he complained about my 2 points.
Couldn't do it today, even to save a life. Isn't it great how Congress protects us?
It's a nightmare, for sure. In August my buyer's offer on a short sale was accepted by the lender after 4.5 months of consideration and the buyer was given just 2 weeks to close. We did it, but it was tight. Could we do the same this month? Not sure.
In my area of Canton OH, it's taking 3 months or more to close a foreclosed houses, and it was CASH. The problem here is that the homes are sold by the bank before they get a clear deed.
You have to stay in contant contact with the buyer to keep them from walking.
Ken, youa re right, 45 days seems to work. I had one that was supposed to close in 30. Guess when it looks like it will actually close...SO SMART! Almost exactly 45 days. We really should have known better! :-)
I just closed one last week. It took longer than usual because the BA was stubborn. When the underwriter is requesting something the agent can't say no you will get it at closing. That's not how it works. He was the one to blame.
Great post!! This just goes to show how much the financial side of these transactions are weighing on the banks and mortgage companies. I have had several loan officers this week tell me they could get things closed up in less then 20 days. That scares me. I have started writing contracts with 45 day closings for conventional and FHA and 75-90 days USDA financing and still am having to ask for extentions. Things are definitely not like they used to be.
I have always written contracts for a 45 day close. Unless there is cash. I of course have the "on or before" in the contract so there is no addendum to follow. I was out of the area during the boom and so I have no idea how long it was between 2003-2006 - but I was processing escrows for FATCO and I can tell you 30 days was hard to hit because of volume. When times are really busy I always ask my escrow officer what she would like to see - I so hate writing extensions!
Great post Ken. You are absolutely right, the market today is unlike ANY other market experienced in the past. It bothers me when more seasoned agents will say, "well back in the early 80's we sold homes at 18, 19, 20% interest, blah, blah, blah". Yes, they may have, but they were SELLING homes. Today the loan process is so grueling and underwriters seem to be looking for even the slightest reason to reject a loan, scrutinizing everything (we had an underwriter ask and want written verification about a $19 deposit, a deposit no less, that was logged on one of our clients bank accounts). At no other time in our industry's history, save the Great Depression era, has getting a loan been so difficult. I'm not saying I want things to return to the no doc, no income/asset type of loans of 5 years ago. All I'm asking is that we return to the days just prior to that, when if you had good income, good credit, and a low debt to income ratio you could get a loan without feeling like you just got waterboarded. Best of luck to you.
Right on the money. The range of time that it can take for the loan to go through U/W and get to a closing table can vary greatly depending on the loan file. A lot of obstacles these days. It comes down to the simple fact the cleaner the file the faster the process. The upfront tips you gave is key. Being prepared in advance for what will inevitably come makes all the difference in the world when there is a deadline to meet. Great post.
"every line, every blank, every disclosure, every title change, on every form and document very seriously."
Well dang wouldn't that create some GOOD loans!!
"Forty-five days is not from the offer date" - I've said these EXACT same words, and more than once to the same Realtor. We can close them in 3 weeks .. if ALL docs are there from day one, the appraisal is clean, etc. It also depends on the type of loan.
Ken: In today's market, this simple question has no easy answer. Your 45 day "rule of thumb" answer is probably safe, but comes with no guarantees. Truth be told, anything can happen, even to the simplest and "cleanest" of files. All a lender can do is their very best ... and then hope that's enough. Sounds melodramatic, but it's true.
Here's another "rule of thumb" for everyone out there ... if a lender is promising you something that sounds too good to be true ... it probably is and you should run .. not walk ... to find another lender and at minimum ... get a comparison opinion.
As a professional closing coordinator, I agree that it's key to a smooth transaction to set the expectations realistically at the start and to never, ever indicate that the closing date is set in stone. I've always tried to be sure the client has a 'plan B' just in case!
The VAR contracts say that closing will take place on or about such and such a date. I have had quite a few closings postponed but at least I did not have to rush around to get the closing date changed on the contract! Unfortunately, we can do everything that we are supposed to do and someone else may drop the ball!
Ken, VYSTAR is running 60+ days behind on their files right now. They are swamped with people trying to get in on the first time home buyer tax credit. Fortunately, I don't use VYSTAR!
Ken - I have had to explain HVCC to three buyers recently (and one seller, too). I have an appraisal that was $16,000 off the contract price, and another that was $22,000 off over the summer. I have been shooting for 45 days on my stuff, too, even though I would love to do them all in 3 weeks.
Ken. this is a great topic. It seems that the time can vary between different lenders in gerneral and their underwriting policies among other things...
The key, as always, is communication! At some point, the file is out of the mortgage broker/loan officer's control but there is a lot riding on the closing date. I found that those involved in the transaction (buyers, sellers, realtors) were generally very understanding about potential delays as long as they were kept informed throughout the process.
Hello, Great Post! In my neck of the Desert I am finding most of our lenders can close in 30 or less, but it is such a case by case basis thing, that you really have to evaluate your buyer's situation. I have a buyer that has been working on pre-qual for 1 week because she is self employed and has a rather large income, but the lender needs to get it all documented properly 1st! :)
A lender told one of my clients he could have him closed in 8 days after I had been telling him to expect 45. Then he found out those 8 days were after inspections, appraisal were complete. Again, underpromise....
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Safely you should be saying foty-five (45) days and be prepared for more. Can it be done faster? Sure! Anything can happen! Forty-five days is not from the offer date it is from the date you have the fully executed sales agreement in the hands of the Loan Officer. This article is about setting expectations. And I've got to be honest with you, if even one of you replies and says, "Well MY lender says ..." - don't bother. You didn't read the article. Today is a different world in the mortgage business. It's nothing like it has ever been in my years in the business. Rates have been higher, values have been lower but never in my years have files been so oddly handled. I don't care if it's in-house underwriters or out-house :) underwriters. Things are different today. Lenders who are "getting around the process" are also getting investigated and some of them are getting shut down.
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Ken,
Great post. I have been hearing 45 days from everyone I have been using to close an FHA loan. If they get it done faster great. It is always difficult if you set the expectation to closer quicker and then have to go back and have both parties sign an amendment to extend the closing date. Thanks for the info.
Jeremy Williams
Keller Williams Realty NE
Kingwood, TX
www.williams4yourhome.com