It’s one of the most stressful things mortgage originators, realtors and buyers ever face – last minute emergencies with closings. Without careful and considerate management, it is easy for a client to find themselves in a strung-out paperwork battle and a fight against time. But fortunately, the mortgage lending process doesn’t have to be this way for you.
Let’s take a look at the different steps in the lending process and how you can avoid being left with little to no time left on the clock!
The Lending Process explained
In theory, the lending process shouldn’t be a difficult process to tackle; it essentially breaks down into six basic steps:
- Conditional Approval
- Final Approval
Theoretically, once the mortgage application is complete, it can be pre-approved with validating documentation and a contract can be drawn up so that the client can progress. This should take a reasonable length of time and come with as few complications as possible.
However, not every lender makes life as simple as NOLA Lending! But even NOLA Lending sometimes gets stuck with last minute issues during verification (usually things the buyer didn’t disclose) or if someone such as a 3rd party drops the ball.
Common problems in the lending process
Unfortunately, some lending agents from other companies often choose to incorporate drawbacks into the lending process. NOLA Lending always advocates against these tactics and aims to secure your loan as quickly and accurately as possible.
Other lenders can delay your closing by a few extra weeks for any number of reasons such as:
- Lack of experience
- Poor management
- Lack of communication
How a 30 day contract can be misused
Let’s take a look at how you could lose time and money by negotiating with an irresponsible lender.
First, understand that if you write a 30 day contract to close but you have the lender wait 10 business days for inspection and responses the close date is already in jeopardy. A lender cannot get officially started without ordering an appraisal, so if you put that on hold for inspections the lender may not have enough time to close.
Below are steps to understanding a 30 day contract, title, and submitting the file for approval from a lender’s prospective:
- Receive ALL client docs including the contract. Delaying sending the lender a document can “pause” the whole process.
- Order title
- Order appraisal
- Order insurance
- Request additional documentation from clients and/or agents
- Lender waits…
- Documents are returned (hopefully quickly)
- The loan is presented to the underwriter
- Lender waits…
- Underwriter issues conditional approval
- Lender works approval and requests all required items from 3rd parties
- Updated income or assets should be obtained
- Missing signatures on real estate forms should be completed including amendments, etc.
- Explanation letters may be required
- Updates or corrections to appraisal or title, or any other issues should be addressed
- Lender waits… until everything is received from ALL! We cannot submit for final approval without these final docs!
- Once ALL documents are received from ALL parties, submit for final approval and Clear to Close.
- Receive final approval and Clear to Close
- Send closing package
This may seem like a simple process, but let’s take a look at what is really going on here.
- The contract is written – so far so good
- The clock starts 30 days counting down – Those 30 calendar days are really only about 22 business days
- Lender waits on inspections (only if Agent or Client requests the lender to do so). This may mean up to 10 – 12 days of additional delays
- Now there are only 18-20 days left and counting down quickly
- All paperwork must ordered from different parties which can take time while we wait on what we asked for
- The time in between dwindles down to about 5 business days or less of close very quickly
As you can see, not everything is quite as simple as it seems. Unfortunately, these delays are all too common.
How a 30 day contract can be further delayed
Other legitimate examples of how the lending process can be delayed can include:
- Insurance company waits until the last minute to submit insurance as it is needed long before the close date (express a sense of urgency with your insurance agent)
- Clients employer takes a while to provide information (same as above)
- Client takes a while to produce docs (work urgently and diligently to provide info & docs)
- Agents may take a while to produce required certificates or inspections
So if a poor lender wastes valuable time and everything doesn’t come back to the lender within 48 hours from the closing, and it takes 24-48 hours (generally) for an underwriter to review submissions; last minute issues can appear quickly, and worst of all, appear to be all the lenders fault although it really is not.
How to get the most from the lending experience
NOLA Lending wants you to know there are many responsible lenders out there and we hope you chose one of us to work with, and that there are simple ways you can help combat unnecessary delays in the lending process.
Here are some quick tips NOLA Lending advocates to help you save valuable time and money:
- Research the company you are going to work with
- Talk to an loan agent and see if you agree with their attitude and competency
- Make sure you uphold your part of the contract and submit paperwork immediately
- Feel comfortable being able to discuss the progress with your lender
- Feel comfortable being able to discuss any discrepancies
- Use “Full Disclosure” with your lender
NOLA Lending wishes you the very best in your lending process and hope that you have a fulfilling and profitable experience. If you have any questions regarding something you have seen here, or about lending in general, please feel free to contact one of our friendly agents at NOLA Lending in Covington who will be more than happy to answers any and all questions, with no obligation.
So what are you waiting for? Find out how NOLA Lending in Covington can help you today!