Mortgage ApplicationFor many real estate buyers and sellers this can be the most frustrating part of the whole transaction. Both parties are ready to close. The closing date has been set and the title company has already scheduled your closing appointments. The buyers are ready to move in and the sellers are ready to move out. Everyone is prepared and on board.

And then the lender throws a kink into the schedule.  They need more documents, they need more time, they need to verify all kinds of last minute information. Information that has previously been provided to them multiple times.

STRESSIt can feel like a merry-go-round but the lender will not approve the HUD-1 Settlement Statement until everything on it has been cleared by them, checked, double checked and signed off on by numerous amounts of underwriters, strangers & probably someone that has a massive stack of files in front of them & a computer generated check list.

It can be frustrating, it can be annoying and it can cause huge amounts of tension between the parties involved, the Realtors representing them & the title company processing the transaction.

There’s no way around it. A buyer can’t buy unless the lender approves the purchase.

So what is a buyer or seller supposed to do? There are some things that can be done, if for no other reason than to relieve the stress and keep the process moving.

For Sellers:

  • Be prepared. Your real estate agent should inform you that one of the requirements for any offer to purchase is that they have access to the buyers lender so they can independently verify the status of the loan.
  • There is no automatic extension as provided in a Texas real estate purchase contract for the closing date, so an amendment to the contract regarding the closing date would need to be signed by both parties.
  • Personally, whether representing buyers or sellers, I would never advise either party to move forward with a scheduled closing until we have had at least 24 hours to review the final HUD-1 Settlement Statement. This statement details what each party either has to pay or receive and it breaks down all of the costs involved in the transaction.
  • This settlement statement is incredibly important & there have been times that we only had 6 hours or less to review it & make sure the details of the financial part of the contract are accurate. We’ve done it before & we can do it again but true representation means we move the closing date to the next day so that the settlement statement can be verified for our clients.

For Buyers:

  • real estate closing frustration 1Be prepared to provide a phone number & contact person for your lender to the sellers agent. Personal information will never be divulged by the lender but questions like, “Are we still on track to close?”, “Is there any additional information that I can give you about the property/sellers that you may need” or “If there is going to be any delay in closing, please let me know as soon as possible so that I can inform my clients”. These types of questions will be answered by a lender and they will all lead to a smoother, less stressful transaction by the sellers.
  • Remember, your credit score will be checked both at the time of financing application & on the day of closing and probably a few times in between. So don’t rock the boat. Unless directed by your lender to increase your credit score, the status quo is best.
  • Be prepared to spend a lot of time both on the phone & online with your lender, especially right before closing.
  • If you know of any reason that closing may be delayed, then please make sure the seller agent is aware. You don’t have to go into detail but common courtesy should dictate why it’s important that the seller knows.
  • Don’t panic. Just because your lender did not approve your loan by the close of business on your scheduled closing date, doesn’t mean they won’t approve it in the next few days. The seller will undoubtedly be a little nervous but everything you can do to reassure the seller will all work to a favorable outcome for you.
  • Be prepared to sign an extension to the closing date. This does not change the terms of the purchase contract but it will give you a little breathing room when it comes to satisfying your lender while still keeping the contract alive.

Sold propertyThe bottom line is, the seller wants to sell, the buyer wants to buy. Being open & honest on each side of the table can keep tensions down & spirits up. This is an exciting time for both parties so don’t let lender issues or delays be the reason that you can’t enjoy the whole experience. After all, how many times do you get to sit at a closing table?

30 day closings are a bit of a myth. I’m not saying they’re impossible but they are harder & harder to accomplish unless the buyer is a cash buyer. Stay in touch with your real estate agent & make sure that the sellers agent can & does understand what’s happening with the financing.

You’d be surprised by how much your agent can do for you when your lender lets you down.