Buying and selling homes has a lot to do with timing. When negotiating contracts, it’s common to want to select a closing date on a Friday or the first or last day of the month. Know that those are the busiest times of the week and month for title companies and lenders. With the current financial climate, most closing dates are chosen as to the 30 day window of time that might be needed from the purchase contract date to accomplish financing goals. So watch your closing dates to avoid extending a closing date.
A purchase contract date starts the clock ticking. A lender typically needs 30 days or more to process a loan for a borrower. However, it’s always wise to allot enough time, ie more than 30 days, in case there are “snags” in the borrowing process. These days, most lenders will suggest 45 days due to new guidelines created by the Consumer Financial Protection Bureau (CFPB).
A “snag” could be that a borrower has moved money from one account to another and needs to document that money transfer to an underwriter. If the borrower has applied for new credit, increased the debit on a credit account, or any other larger financial transaction, this could stall or even kill the mortgage process. Stalling the process may delay the closing date, so be prepared for that to occur.
If the mortgage process hits a road block and the buyer no longer qualifies for the mortgage, there may be circumstances where they lose their earnest money if the snag was intentional, but for most circumstances, not qualifying may signal a return of the buyer’s earnest deposit to the buyer.
If the closing date is postponed due to any number of reasons, know that you are still responsible for a mortgage payment, home owner’s insurance and utilities. As long as the home is still in your name, you are responsible for maintaining it.
Extending a close of escrow date can be frustrating as it produces another round of phone calls to movers, utility company shut off dates, and may stall your next move. Being conservative in dates by doubling up on utility services between your current and next home can be extremely helpful if you’re next move includes setting up services. Remember that carpet shampooers need electricity and water to operate. And transferring all mail by using USPS.com helps to eliminate the need for straggling mail and will cover some of the bases.