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For any real estate transaction to proceed smoothly from beginning to end, there are many tasks that need to be performed efficiently by many parties. This is a fact readily accepted and understood by those of us in the business. We all understand the specific jobs we need to do if a home purchase, for instance, is to close without a hitch. As a mortgage professional, a crucial aspect of my job is making sure that my clients, the homebuyer, understand what their jobs are. It is a standard discussion I have with all of my clients when they begin the mortgage process. Particularly for first time homebuyers, the complexities of a real estate transaction can be confusing and stressful. However, if a homebuyer/mortgage shopper clearly understands what is expected of them, much of their stress can be wiped away. Once a suitable loan to fit a buyer’s background and goals has been decided upon, the client should then be advised as to exactly what documents they will need to furnish to obtain lender approval. When the lender approves the loan, a commitment letter will be issued clearly stating a list of conditions that will need to be met before the file is cleared to close. I have found a congratulatory phone call to my clients a good opportunity to go over this list together and make sure they understand which conditions they are responsible for. What can go wrong? I am sure we all have stories to tell. I am reminded of a couple who purchased a home pre-construction in a desirable community. Upon receiving their commitment letter up front to satisfy the builder, I went through a list of do’s and don’ts: “Keep your records in order, please be ready to verify any large deposits into your accounts with a paper trail, make sure you have enough money to close, you will need to obtain hazard insurance when we get closer to closing, and, by all means, keep your credit profile clean!” With approximately 1 year to wait until the completion of their home, my clients slid into a lackadaisical sense of well being. In that time, the husband made several late payments which dragged his credit score below the limits of the lender’s loan program. To make matters worse, their savings were significantly depleted. Realizing this, my clients borrowed money from relatives and made three deposits out of proportion with their income documents, a red flag for most underwriters. Unfortunately, these blunders removed my clients from their originally approved loan program. Based on the wife’s intact credit scores, I was able to move them into a strong loan program with a different lender, but at a higher interest rate than if they had adhered to the conditions of the original mortgage commitment. The
professionals involved in facilitating a smooth closing can only
do their job properly if the parties involved in the transaction
realize their responsibilities. Much emphasis should be placed on
open communications between all parties involved. A timely closing
will only occur if all involved pull in the same direction. |
