Let’s face it, a home loan is a complex financial transaction that involves a great deal of information and documentation and requires the coordinated efforts of several individuals and organizations to progress from application to closing.
All parties are generally interested in closing in a timely manner. The buyer is anxious to move into the new home or start benefiting from a refinance. The seller is looking forward to finalizing the deal and getting the funds for their home, often in order to purchase their next property. The professionals — from the real estate agents to loan originators — want the transaction to move smoothly and wrap up on time to free them up to start working on the next deals.
Delays can be frustrating, time consuming, and costly and, in some cases, can even cause a transaction to fall through. Minimizing disruptions to the process keeps your team working efficiently and your clients happy. To help our broker partners, we’ve compiled a few of the common causes for mortgage delays and some tips on how to avoid them.
Sharing Information Slowly
Lots of information has to change hands throughout the mortgage process. Whether it’s that final page of a bank statement from the borrower, the full appraisal report from the appraiser, closing disclosures from the mortgage team, or an updated purchase contract from the real estate agent, it’s critical that information and documentation flows quickly from the parties that have it to those who need it to get their jobs done.
Be sure that borrowers understand how important their roles are in this. It can be frustrating when, in the course of an already busy day, they receive notification that an additional document is needed. But if they understand delays on their end could ultimately result in closing delays (or a stressful last-minute scramble), they are more likely to jump right on those underwriting requests.
It’s also a smart move to communicate clearly with all the professionals involved in the loan the planned closing date and when various milestones need to take place in order to meet that date. When everyone fully understands what needs to happen and when, it’s much easier to keep the transaction on schedule.
Not Taking Advantage of Electronic Delivery and Signing
In this day and age, waiting for the mail or an in-person meeting simply isn’t necessary and can add several days to the process. After all, documents and disclosures can be sent back and forth and even signed electronically, greatly improving efficiency.
When borrowers opt not to sign, send, and receive documents electronically, it is generally because they don’t fully understand the benefits and the safety of this technology.
It’s a good idea to explain how these systems have improved the process:
- Send and receive documents faster
- Speed up the overall process
- Access documents from anywhere
- Save information electronically for better long-term record keeping
- Keep records safe; there’s no risk of misplacing a paper document
In addition, you can help ease the fears they may have about their information being secure:
- The electronic delivery systems used in the mortgage industry make use of extremely high security standards
- Data is encrypted to keep it secure
- Uptime and data backup guarantees ensure the data is available when it’s needed
- Consumers can further safeguard their accounts by using strong passwords and not sharing login credentials with others
What might seem like a small change, such as increasing the loan amount or decreasing the purchase price could trigger redisclosure of state and federal documents, and potentially push closing back by a few days. Work to have all the numbers finalized well in advance so that there are no surprises at the eleventh hour.
Communicate to your borrowers that they can help avoid delays by asking that the appraisal and inspection are completed as soon as possible once the property is under contract in a purchase transaction. This way, if numbers need to be re-negotiated due to the property not appraising or the inspection revealing the need for major repairs, there is plenty of time to get everything sorted out well in advance of closing. By keeping a firm eye on the closing date and encouraging others involved in the process to do the same you can avoid many delays and disruptions, improving your efficiency and keeping stress to a minimum.