Guarantee a Smooth Closing on Your Next Mortgage
In this article I am going to draw on my experience as mortgage banker to outline some of the most common ways that you can guarantee a smooth closing on your next mortgage. I am going to define “smooth” as being a more or less stress free transaction that closes on or before that contractual date as stated on your purchase contract. If you think of you new loan as a production process that is to say material is required to produce an end product with the end product being your loan, then you need to understand the bottlenecks that can slow the production process down. In what follows, I am going to explore what I consider to be the two most important relationships that if managed correctly, will ensure the best closing experience.
The first and likely most important part of the loan production process is the relationship between you, the mortgage bank and the flow documentation to and from. If this is the first time that you have ever purchased a new home the list of documentation that the bank requires will seem daunting. Mostly because these are items that you probably don’t keep in one place or may not have readily available. They may be items that you have even lost or misplaced such as a social security card. Or you may shred your recent bank and or your quarterly 401(k) statements. The single best thing you can do for yourself when you receive the list of required documentation is to immediately start working on it. If there are items that you do not have, put a lot of effort into determining how you can get them. Also, read very carefully what the bank is asking for. A common mistake will be to send in the first page of your bank statement when you’re being asked for all the pages (even the pages that may be blank). The last recommendation that I will make on document flow is to make sure that you send in the documentation together as one package and not piecemeal. Following this strategy will greatly enhance the speed of the loan underwriting process and hence the loan closing.
The second relationship that I want to focus on is that which lies between the mortgage bank and the title company where the actual loan will be closed. If the bank does not have a strong relationship with the chosen title company I can assure you that this can result in having a very bad day. In general, the title company has the fiduciary responsibility to ensure that your transaction is insurable. Furthermore, the title company has the responsibility of generating your HUD1. The HUD1 is basically the final document that outlines in dollars and cents how much money is going where and to whom. To put it lightly, there is a mountain of communication that goes back and forth between the bank and the title company. To further the stress the process, all of the communication typically happens right before you are expected to close and this is true with all mortgage transactions. In order to make sure that your lender has a relationship with the title company it is actually best to ask your lender what title company they recommend and then before you sign the purchase contract make it understood to your agent and the sellers agent that this is the title company that you need to close at. There are some instances where a builder (new construction) will require you to close at their chosen title company in order to get the credit they are offering but in most cases if you ask, you should be ok.
Andrew Steinbrecher is a graduate of Boston University’s School of Management having earned a BSBA concentrating in Finance and Economics. Andrew is currently employed as a Mortgage Banker with K&G Capital Mortgage. For more information please feel free to contact me http://houstonmortgagenow.com/ or read more at http://houstonmortgagenow.com/blog/
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