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GreenerAgent Press

Smart real estate bytes, tips, tricks and opinions

By Danni DeWoody | Agent in Drexel Hill, PA

My Closing Is Delayed?? How Could This Happen?

Imagine you've found the home of your dreams. You qualified for the financing to purchase it, completed the necessary inspections, received a passing appraisal report, arranged for movers and utilities, and now you're down to the week of closing. Whoo-hoo! Everything is done and the closing is right on schedule. What can possibly go wrong at this point, right?

Apparently in the new world of real estate transactions, many things can still throw a monkey wrench into the whole plan and delay a settlement at the last minute. Be prepared to wait is the bottom line here. Sometimes it's a matter of "who dropped the ball" along the way, other times its a no-one-could'v-seen-this-coming kinda thing. Most times, frustrating as it is, these delays are completely out of the hands of the people closest to the buyer (or seller) in the transaction. Your go-to people often have little power here.

What most homebuyers don't realize is that in a transaction involving mortgage financing there are about a ba-jillion different departments involved in the process. Underwriters and overseers are constantly looking at the buyers finances, credit worthiness, property worthiness, valuation factors, recent bank deposits, condition and/or presence of hazardous risks associated with the property like mold or termites, flood zone certifications, etc over and over and over again, combing for errors and things previously overlooked. If they find a problem or mis-matched/ conflicting documentation, small and insignificant as it may appear, it will surely delay the next step in the process and if the next step is final approval - what's known as getting the "clear to close" - you may need to start making temporary arrangements for moving day and utility transfers. Lord forbid something needs to be changed. Oh boy. If its a biggie like your APR, it could take weeks to get back to the table again. Everything is changing in the mortgage industry and while these changes are designed and implemented to avoid repeating past mistakes asscociated with frivolous lending, it can open up a whole new web of emotions, finger-pointing and threatened legal entanglements between buyer and seller.

There used to be a time when the buyer would go for a pre-settlement walk through and if something didn't work right then concessions would be made by the seller at closing to compensate the buyer, no big deal. NOW if theres a problem and a seller's "assist" needs to be applied or changed the day of closing, you can probably forget about closing THAT day as it will require a whole new review and approval process by the bank. If you think that will happen quickly just because you're supposed to close that day, I have some beach-front property in Arizona I'd like to talk to you about.

But seriously, can this be avoided at any cost?
Nope. Unfortunately, there is no way possible to guarantee a property will close on time, especially nowadays with stricter and ever changing laws on disclosure, notification of fees and changes, etc.  Now that's not to say it will happen more often than not but just make sure you are doing (and providing) everything your lender asks for WHEN he/she requests it and know your contract's deadlines and due dates (a good REALTOR would be on top of that as well).

Finally, once you sign the Agreement of Sale don't make any large purchases or unapproved deposits, don't open any new credit cards or do anything that will lessen your credit score or financial status until the day after you close. Stay on top of things regarding insurance and condo documents, too. You never know where a shortcoming will come from.

Good luck, stay alert and practice safe homebuying out there!

Comments

By Chad Bahnsen , Loan Officer,  Wed Nov 18 2009, 17:48
Interesting and infromative comment Danni and you make a lot of sense. While the mortgage process is indeed a complex one and clients take for granted all the hard work the loan officer and even the realtor do to get them to the table- the client still deserves outstanding service and to be kept in the loop throughout. When looking for a loan officer clients look for three things:1. Low rate 2. Low fees 3. Great service (which includes working with a loan officer that is knowledgeable, personable and most importantly one who can get you to the closing table :) Rates are pretty much the same nationwide and fees should be similar between loan officers unless one is trying to take advantage of you. I believe the third one is the most important and clients don't realize how important. If you have a thorough, knowledgeable, conscientious loan officer who takes an in depth application AND all parties (realtor, title agent, client, etc) are in constant communication throughout the process these last minute delays will very, very rarely happen. Truth be told, some things happen...that's life....
However, a closing being delayed may happen to a loan officer about the same amount ot times that the loan officer has a birthday in a year--once!...maybe twice.....it's not common. The problem is that in this market loan officers really have to know what they are doing and stay on top of things. Most just want to get paid and not put the work into it. Another thing to note is that when a loan officer has a slightly higher rate and/or slightly higher fees that loan officer gets paid more money to close your loan. You'll find a correlation between loan officers who may have slightly higher rates with those who are very good at what they do. The reason is that true professionals don't work for free by waiving a bunch of costs and lowering your rate to where they don't make any money. They value their time and expertise too much to do that. That being said rates and fees should be very similiar as I've mentioned, but if you get a loan officer that's trying to beat another loan officers fees and rates that means that loan officer is working for a small salary (since most of us professionals are on commission) if you have one that isn't making much money on your deal they probably won't put a lot of effort into getting you to the table either..just food for thought. The same thought process goes for realtors who are asked to lower their commission. If you want a realtor that work "half ass" to market your homethen pay them less and that's the service you'll get. Somtimes you get what you pay for and loan officers get paid by fees and rates. Also, some loan officers will quote low to get your attention but then change things later on. In a nutshell, it's good to shop around but if you want to actually close on time before your rate lock exprires the expertise of your loan officer is worth much more than a 1/8 lower rate or $200 less in fees. If the loan officer keeps in constant communication with everyone throughout the process in the very rare instance that a closing has to be delayed all parties will know well in advance that is a possiblity, and what the reason is for that. Delays can also happen because realtors, title agents, or even the client do not do their job and what is asked or expected. As long as all parties know up front what is expected and do what needs to be done there should be no problems. If a loan officer (or another party) does not do what they are supposed to there are consequences to actions...and those consequences may be not getting to the closing table on time, or even at all.

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