Avoiding Mortgage Closing Delays and Close on Time

This guide covers avoiding mortgage closing delays and closing a home loan on time. Mortgage loan closings often take longer due to many avoidable circumstances. Most mortgage loan closing dates are kept on target. However, mortgage closing delays can occur. There are reasons for mortgage closing delays and how to close on time. Some steps can be taken to avoid delays in mortgage loan closings. Borrowers can start by completing the online mortgage application as accurately as possible. Dustin Dumestre, an associate contributing editor for GCA Forums, explains avoiding mortgage closing delays as follows:

Mortgage applicants must realize that all the information on the mortgage application will be verified. One of the top reasons for mortgage closing delays is that the application and submitted documents must be completed.

Discrepancies listed on the mortgage application and documents provided are reasons for closing delays. For example, if a mortgage applicant states that they make $5,000 per month and have $10,000 in a checking account, that information needs to be verified by W-2s, paycheck stubs, and bank statements. If there are any discrepancies, the mortgage underwriter will require a letter of explanation or additional verification, which will be reasons for mortgage closing delays. This article will cover and discuss the top reasons for mortgage closing delays.

Avoiding Mortgage Closing Delays: Avoid Credit Inquiries

Do not apply for new credit or maximize credit cards during the mortgage process. Applying for new credit will drop credit scores and raise a red flag for the underwriter. Every time consumers apply for new credit, they will have an inquiry posted on their credit report. Each hard-pull credit inquiry will drop credit scores by two or more points. Having multiple inquiries on credit reports quickly will alert the underwriter that consumers are desperate for credit. Underwriters will scrutinize credit files more. Every credit inquiry will need a letter of explanation. Credit disputes need to be retracted and can cause delays in the mortgage underwriting process, which is one of the reasons for mortgage closing delays.

Avoid Mortgage Closing Delays: Avoiding Purchase of High Ticket Items and New Credit

Do not purchase new items on your credit card because debt-to-income ratios will increase. For those on the borderline debt-to-income ratio limits, a charge on a credit card can disqualify a borrower. Do not purchase furniture or other higher-ticket items during the mortgage process. Before mortgage loan closings, new purchases include high-ticket items such as furniture, appliances, and automobiles.

Overdrafts and Late Payments

Avoid having any overdrafts during your mortgage loan application process. Most lenders require no bank overdrafts in the past 12 months. Could you make sure to make timely payments? I have had no late payments in the past 12 months either. Most lenders will disqualify borrowers if they have had any late payments in the past 12 months, especially mortgage payments. One 30-day late payment can drop your credit scores by 40 points.

Frequently Asked Questions on Avoiding Mortgage Closing Delays and How to Close a Home Loan on Time

Below is a comprehensive FAQ on How to Prevent Closing Delays and How To Ensure Timely Closure Of A Home Loan:

Frequently Asked Questions (FAQs) on Mortgage Closing Delays

What Problems Can Cause Mortgage Closing Delays While Closing a Mortgage?

• Documentation: Lack of or timely provision of the required documents can affect the closing of the mortgage.
• Appraisal: Property value is established by determining its worth, which sometimes takes a long time.
• Title: Anything that puts a claim over the property or comes in the way of property ownership must get settled beforehand.
• Credit: Gearing up for new credit obligations or dropping the credit score with new debt can hinder getting approval.
• Underwriting: The need for further verification or more conditions imposed by underwriters can lead to delays.
• Inspection: Conditions that arise during the house inspection. Inspection can be an area of negotiation and repairs.

How Will You Prevent Mortgage Closing Delays In A Mortgage?

• Get Pre-Approved: Ensure you have a full pre-approval before shopping for a home, not just a pre-qualification.
• Gather all your documents beforehand, such as offer letters, bank statements, tax returns filed, pay slips, etc.
• Respond Quickly: Respond promptly to the request for information or documents the Lender asks.
• Avoid Big Financial Changes: During the process, don’t change jobs, incur huge debts, or spend large amounts.
• Schedule Appraisal and Inspection Early: Contact them immediately after your offer is accepted to give yourself time to manage if something goes wrong.

What Documents Would I Need For The Closing Process to be Smooth?

• Relevant pay slips or income proof.
• Tax returns of the past two years, along with W2 and 1099 forms.
• Bank statements that are recent (for all accounts).
• Gift Letters (if you are getting money from friends or family).
• ID(Driver’s License or Passport).

How Many Days Does It Take to Close a Mortgage?

In most cases, the closings occur around 30-45 business days with a straightforward signing and closing. Closings should take at most that since there is a huge competency for deals these days. However, distance and different lending models, such as FHA or VA loans, may prolong it.

What Reputable Practices Should I Follow to Ensure the Appraisal Is On Time?

• Employ a Local Lender: Local lenders have a network of appraisers who are close to the property and familiar with the requirements for evaluating it.
• Enable Access: Ensure that all areas of the house are easily accessible for the appraiser to work in.
• Request a Rush Order: If you need more time concerning the appraisal, place expedited orders to speed up the process (which may attract additional charges).
• Be Ready To Haggle: Always be ready to haggle or pay more if the appraisal is lower than expected. Also, be ready to pay more than the slated down payment.

How Do I Go About Solving Title Issues?

• Hire an experienced title company to solve and investigate the title issues. So that you know, doing that will also ensure a quick resolution.
• Pay off existing liens or attempt to get a good deal with those who possess a lien.
• Buying title insurance to protect yourself from future claims against the property is always a good idea.

How Can I Not Face Credit Issues During the Closing of a Loan?

• Avoid applying for credit cards, a car, or any other loans because opening new accounts can deter the chances of getting a loan.
• Late payments can also have a negative effect. So, paying your bills whenever they are due is always best.
• When accounts are closed, the chances of having a lowered credit score are common, so it is best not to close old credit cards.
• Big items such as new furniture or appliances should be avoided until a loan is finalized.

For the Underwriting Process to Go Smoothly, What Can an Individual Do?

• When a lender asks, it is best to be open about income, assets, and dues to allow for a seamless process without surprises.
• When providing updated figures such as pay stubs and bank statements, remember to keep them accurate to avoid unnecessary problems.
• Doing what a lender requests is a good way for the process to go smoothly.

Will Issues That Arise During House Inspection Delay the Closing of a Deal?

• Yes, it can if a home inspection uncovers issues that require significant work, including acquiring even the slightest of loans.
• You or the seller need time to talk about the changes to be made in the contract.

Solution:

• Request an Inspection before placing an offer to avoid making an offer without knowing if there are any issues.
• Be prepared for minor repairs, as this could waste time.

Who is the Lender in the Deal, and What Are Their Responsibilities?

The Lender organizes several elements of the closing process, including but not limited to the following:

• Processing the loan application.
• Arranging for the appraisal.
• Providing an underwriter who looks over the loan and meets certain conditions.
• Distributing documents required before completion.
• To speed up the process, hire a reputable Lender who communicates when required.

What is the Closing Disclosure, and When Can I Expect It?

• The Closing Disclosure (CD) document provides the final details of the mortgage loan that has been negotiated. The terms provided could include the loan amount, interest rate, monthly payment, and closing costs.
• According to the law, we would like to see the CD at least three working days before the deal’s completion.
• Exercise caution as this document outlines many important dates, including up to five calendar dates for milestones and a final settlement. If there are any discrepancies in the dates, let the concerned authority know as soon as possible.

What Can I Do to Work With the Seller and Ensure Minimal Mortgage Closing Delays?

• Negotiate Early: Get timelines for how long assessments and repairs will take. Good luck eliminating last-minute last-minute surprises.
• Communicate Often: Regularly communicate with the seller or their estate agent and update everyone about deadlines before the scheduled dates.

What Should I Do if There Are Some Reasons I Delay My Work?

• Could you inform everyone Relying on You: Ensure the Lender, real estate agent, and seller know about the delay?
• You can use the New Closing Date: Please request a contract modification if you need to change the closing date.
• Breach Lock Rate Period Request: On rare occasions when the period exceeds the rate lock period, request the Lender for a plan extension to avoid high interest rates.

Is There an Option That Allows Me to Close Faster Than the Anticipated Period?

• Negatively, that isn’t particularly the case, only an absolute thought where none of these apply if:
• It is possible to close within one month if you’re pre-approved and have all key documents ready.
• The property has adequate issues in terms of title and appraisal.
• You’re working with a lender who appears to be accepting applications on an expedited basis.

What Are the Closing Process Tips For Staying Organized?

• Make A Checklist: Be aware of all necessary documents to be submitted and certain deadlines set for them.
• Create Reminders: Use mobile phone calendar alerts for important dates, such as document submission or review of the Closing Disclosure.
• Communication: Call your Lender and talk to your agent regularly to update you.

What is Done on Closing Day?

• Final Walkthrough: Check that the property is in the agreed condition by/can be on the agreed date.
• Document Signing: You’ll sign the loan documents, including the Closing Disclosure and promissory note.
• Settle the Closing Costs: You must wire transfer the cash balance or bring a cashier’s check.
• Receive the Keys: After the funds have been transferred, you will be given the keys to your property.

What To Avoid During the Closing Stage?

• Unknown Deposit: Unaccounted for, cash/deposits within the bank account may amount to questions.
• Deadlines Incompleted: It is very easy to miss timelines when documents must be submitted.
• Poor Communication: Noncompliance with lending agreements by choosing not to communicate or respond in time may lead to delays.

What To Do To Have The Funds Ready For Closing?

• Could you check the Amount Needed for Closing? Make sure closing disclosures match checking balances.
• Always Use Certified Funds: A policy that does not allow personal checks allows cashiers’ checks or wire transfers to be used.
• Do you know who will coordinate The closing date?

All parties, such as the Lender, you, the estate agent, and the seller’s team, set the date. Good communication is key to a smooth process.

What Should You Do When The Process Comes to An End?

• Set Payments: Confirm with your bank the auto-pay option for mortgage payments.
• Please change your address: Please change your address for utilities, employment, and any other services you use.
• Make Your Residence Safe: Replace functional locks, set up security systems, and initialize utilities in your name.

The best way to avoid closing delays with a mortgage is to plan, communicate effectively, and be responsive. I want you to know that organization and collaboration with your lender and real estate group will ensure a quick and efficient closing.