What we all want is faster closings. The buyer wants that. The seller wants that. All the agents want that. The mortgage originator, their broker and the lender want that. So, let's stop all the finger pointing and take care of business in a flash with a smile.
Here are seven things guaranteed to expedite closings where the mortgage is concerned if needed.
1) Get pre-approved before you start shopping. Making an offer on a property you do not know if you can afford is not even close to wise. If you cannot afford the loan payments buying that property is a bad idea. In addition to that if you have taken the time to get a legitimate pre-qualification the loan officer is already in possession of much of the information they need to move you forward. Be absolutely precise and accurate with the information you supply to the loan officer on your pre-qualification application! If not it can and will bite you in the end.
2) Keep a copy of your earnest money check. Even though it may be that the lender will need the processed check at least you will have a good copy of the check to give to your loan officer from the beginning.
3) Get copies of all pages of your last two bank statements. Even though you may not need this for your loan (you most likely will) you should have it ready. The lender will want to see all pages (front and back) of your bank statements. Many times we receive pages 3 of 25 through 21 of 25. If that's what you send you will be asked to supply the missing pages. If you have multiple accounts this goes for every account whether checking or savings.
4) Get a photo quality copy of your proof of identification. Usually this is your government issued photo ID (driver's license) and your social security card. If you can, scan them and email them. Most fax machines send something similar to what you see on the right. Really, what is a lender supposed to do with this? This is one of the most common delays in processing of a file. If you send this you will be asked to resend a legible photo quality copy.
5) Find your tax returns (W2's, 1099's, K1's, etc) for the last two years. Go find them right now and make clean legible copies and store them in a folder marked Financial Statement Docs. We keep ours in a safe deposit box at the bank. We update it regularly and it is always ready at our disposal. No digging around for documentation here!
6) If you are recently divorced or newly married and all of your documentation does not reflect your current status you need to have that information at the ready. The loan officer cannot, by law, ask you if you are divorced. All they can ask is, "Are you considered to be married, separated or unmarried?" Just another result of our liberal government forbidding the asking of questions perceived to be painful when ultimately the answer may be required. Well, ask it or not, if you are divorced you'll probably have to prove something either from a credit history standpoint or a name change standpoint. Very often divorced applicants will have something on their credit that should have been taken care of by the ex-spouse which is a little wrench in the works and having that documentation ready will help tremendously.
7) If you have recently made any abnormal deposits you are going to need to provide a paper trail. The reason you will need to do this is to prove that this deposit was not as a result of borrowed funds. So, if it is from a gift of money from a direct family member you will need to show a Gift Letter. Ask your loan originator to give you one so you can have it completed ahead of time.
Other delays include slow returns from employers on verification of employment (VOE), slow return from seller on fully executed sales agreement (HUD is the worst), insurance companies that don't care that you are in a hurry to close and can't seem to get the loss payee clause correct (every day - EVERY day we struggle with this one), title agents who take days or weeks to complete a title search (generally we find this in smaller towns - larger towns this is a 24 to 48 hour period: nothing against small towns, I'm a small towner myself, just HURRY UP!), appraisers who are requested to make additional notations or show additional comps who drag their feet for as long as a week or more. All of these and more are possible clogs in the pipe to slow closings.
This list is in no way complete. And do not fall for that Lie Tech commercial making you think you won't need some of these items. Every conventional lender, every mortgage banker, wants to see the exact same documentation on a full doc loan. There is no magical appearance of proof of your income, assets and credit history. Sure there are no doc loans if you want to pay the extra 1.5% to 2.5% for the risk you are placing on the lender. But to get the lowest rate provide the most documentation.
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