There are various benefits to be had from closing early on your purchase or refinance. To begin with, you get access to lower mortgage rates. The more delayed you close, the higher your mortgage rate will be.
If you are buying a home, another advantage is assuring the seller that you are serious on your intention to purchase. Closing faster and settling the financing needed is especially helpful when you are bidding against another buyer on the house.
Closing early, furthermore, protects you from messing up your mortgage financing due to decision changes that might result from unexpected life events.
So how do you secure a faster mortgage closing? The following are some tips that can help you achieve this goal.
Manage the paperwork
It is standard procedure for underwriters to verify borrower documents in accordance with the qualified mortgage guidelines. One of the most common causes of closing delays is the unavailability of the necessary documents so if you want to get the process rolling, see to it that they are ready beforehand.
The typical documents required for underwriting include two years worth of tax records, pay stubs, financial statements covering your investment, retirement, and bank records, among others.
Review your credit report
Reviewing your creditbefore applying for a mortgage is a practical necessity. Not only does it let you look for the range of mortgage options that fit you but also helps you refute any faulty records that could hamper your loan approval.
Disputing a faulty record in your report while underwriting is on the roll is not a good idea and it might be too late for the underwriter to honor the change, so make sure your credit history is accurate.
Your loan application goes through two approval processes. The first one is the initial evaluation of your income, credit, employment, and home values. That is what you most commonly hear as the loan pre-approval. The second approval process is done before closing to check if nothing changed in your loan information from the time of the initial approval to the loan closing.
If you take out another loan, for example, or changed jobs, your lender might have to redo the whole approval process. The restart does not only delay your closing; it can also decrease your chances of getting the loan itself.
The most common changes or instances that can cause a re-start in your loan application evaluation include:
- change of employment
- applying for new credit
- taking out another large debt such as a car loan
- missing loan payments
- making large purchases
- making irregular deposits or withdrawals
It is important to keep in touch with your lenders should there be additional information to be demanded regarding your application. You cannot simply forward your paperwork and expect to hear from them again on verdict day. There is going to be conversation and probing about your income, assets, and finances.
The sooner the lenders get the needed information to evaluate if you are indeed a dependable borrower deserving of their investment, the sooner you will get to closing.
The typical mortgage closing time is about four to six weeks but if you follow these steps, you have a good chance of closing earlier. Keep these tips in mind and reap the benefits of a quick mortgage close time.