If you are considering purchasing a home, you may be wondering how long the actual loan approval and closing process will take. One recent estimate shows the average home sale takes 42 days. Here are a few tips for what you need in order to ensure the process is as quick and painless as possible.
1. Find an honest and motivated seller
The seller has a great deal of leverage in the speed of a home loan closing. A smooth, quick appraisal process is entirely dependent upon the cooperation of seller. If the house or property has any known issues, having these stated clearly upfront can expedite the process of repairs. Also, repair negotiations will go much more smoothly if a seller is highly motivated to move the process along quickly.
2. Hire a capable and experienced real estate agent
Real estate agents exist to guide the process of selling or buying a house. These days, with the mountain of paperwork and seemingly endless details that accompany this choice, the realtor who really knows their stuff is going to be the one who has navigated the mortgage maze time and time again. Anyone can speak well of their own skills but quality referrals and references offer a more accurate picture.
3. Get loan pre-approval
There are experts on both sides of this coin. Some would tell you that having a pre-approval from your lender will not make any difference in the actual approval and closing process or the time that it takes. But a pre-approval will give the seller assurance of your capacity to follow through on your offer and you an accurate understanding of what your credit will allow. Much of the information that the lender requires for your final approval will already be in their hands allowing them to move quickly from the contract writing to the underwriting phase. All that is lacking will be property specific such as the address, appraisal value, and home inspection.
4. Have all required paperwork handy and in order
Paperwork takes time. Days can be lost in an attempt to gather everything requested by your lender. Start by knowing what will be required and have it already prepared. Most mortgage companies ask for the same documents: two years of tax returns and W-2 forms, the two most recent bank statements, your two most recent pay stubs, a copy of your driver’s license, social security numbers, and documentation for any unique credit situations you may have. Plan ahead and consider scanning these documents into one easily accessed folder.
5. Be completely honest with your lender
Don’t try to keep secrets from the mortgage company. Verification processes are in place and whatever you try to hide will be discovered. Not only is this time-consuming and unnecessary, it can be considered mortgage fraud.
6. Have clear property title and completed construction
There are plenty of opportunities for a home sale to be slowed down when there are special issues involved. A property that has title issues, is bank owned, foreclosed, a short sale, under construction or in the middle of repairs and remodeling will require additional considerations that could push your closing date several weeks farther than otherwise anticipated. These types of deals can have plenty of redeeming qualities but should be avoided if closing time is a primary concern for you.
7. No major changes during the underwriting process
One of the simplest ways to delay your home loan approval or prevent it altogether is by making major changes between your application for the loan and its completion. Large decisions that affect your credit such as a new auto loan, new credit cards, or charging up the balance on current cards can be a real setback. Red flags go up with anything considered a change of circumstance. This also includes alterations to the actual loan products or terms. Keep it simple and put those ideas on the back burner until closing is complete.
8. Fast and cooperative third parties
This last one is not often in your control or even within your influence. Third parties such as appraisers, inspectors, title companies, and repairmen work on their own schedules. The lenders themselves may be overloaded with other loans. When you have a choice, look for those with a reputation for being on time.
Courtesy of: The Houston Chronicle
Written by: Mario Garcia Jr.