The Mortgage Process
The mortgage process involves many moving parts and responsible parties that must align and cooperate, respectively, to ensure a smooth closing process. Often, however, details are missed throughout, resulting in surprises and problems at the closing table. Understanding what to keep abreast of before closing will ensure a more pleasant closing experience.
A common problem resulting in closing delays is a result of a lender not sending the closing documents to the title agency or attorney in a timely manner. According to the U.S. Department of Housing and Urban Development, the closing statement should be available for review at least 24 hours in advance. Too often this rule is overlooked and documents are sent out the same day, hours or even minutes before the closing occurs. By asking for a copy of the settlement statement a day in advance, a borrower will have an opportunity to review figures ahead of time, and also ensure that the closing documents have indeed been sent.
Wrong Payment Figures:
Borrowers are often surprised at the closing table because the total monthly payment doesn’t match what was quoted at the beginning of the loan process. Review the settlement statement before closing to check four numbers: the loan amount, the interest rate, and monthly principal and interest. If these differ from the initial estimate, ask the loan officer the reason for the difference. If monthly insurance and property tax escrows are also part of the monthly payment, be sure to verify these figures before closing, as the actual figures may differ substantially from lender estimates.
Wrong Cost and Fees:
According to Bankrate.com, “Borrowers who aren’t familiar with the intricacies and minutiae of the lending business could… find that all of a sudden they’re going to have to come up with a few thousand more dollars or lose their houses and loans.” Beware the sudden changes in closing costs and fees. Be sure to compare final settlement statements with initial estimates and question any outrageous or additional fees, especially to origination, discount, and processing fees. If the cost is too substantial to bear, tell the lender to absorb the surprise costs, or otherwise risk losing the transaction.
Closing delays can occur when a lender has requested a document that has not been provided throughout the loan process, and is still outstanding at closing. Usually a loan officer has failed to request this document earlier on, and the lender will not allow the loan to close without it. Be prepared by confirming with your loan officer a day in advance that all necessary documents have been provided and that no outstanding documents remain.
Mortgage approvals often come with a list of conditions that must be satisfied before closing. In addition to borrower qualifications surrounding credit, income and assets, the property itself must satisfy lending guidelines. With all the parts that make a mortgage, check with your loan officer throughout the process to ensure that the lender has signed off not only on borrower documents but also property requirements, to prevent last-minute blowups, requests for documents and other seemingly minute but in fact major elements that will alter an approval.