What slows down a closing? Part 2: Lenders and Volume
Within every bank there may be a half dozen hands that your mortgage goes through, and every touchpoint is another possibility for delay. You can do a lot to make sure that your bank isn't a source of delays by being informed.
Here are the five most common "hands" that your loan will pass through (as well as all of theirs assistants, lower-tier versions, etc):
Mortgage Loan Originator - This is, in my opinion, the most important person in the process when it comes to making sure that your loan isn't delayed. If this person is well informed and well educated, most of the delays, later on, aren't possible. You can help this person by giving them ALL the information about your home you possibly can. The MLO's job is to help you pick the right product - should you get a conventional 15 year fixed, or a 30 year FHA 203K renovation loan? Their job is to know the products available, and the qualifications for each. Here is how they can help you avoid delays:
Imagine that you want to renovate your home; you built a standard ranch home on 15 acres 20 years ago, and its time to "spruce it up." The MLO gives you the option to do a renovation loan through FHA, and you excitedly say yes. However, when the appraiser gets to the home, they find that the well was placed 5 ft from the property line, there is chipping and peeling paint on the white picket fence... all of which would have to be fixed in order to secure the loan... and was not in your budget. If the MLO knew this up front, they could have the cadid conversation that this may not be the product for you. Instead, because they didn't have this information, you're back at square one.
Loan Processor - a good loan processor keeps the ball rolling. Be in regular communication with this person. Don't allow your loan to drift to the bottom of the stack of loans coming in. Banks are like fishermen - once they have you on the hook, most of their work is done. This person should work for you to ensure a smooth and quick closing.
Underwriter - this is the risk assessor for the lender, and reviewer to make sure that the mortgage will be able to be sold. Most underwriters are fantastic. Some, can slow down the process. I've occasionally gotten revision questions that have slowed down the loan that are silly - "Is the [city lot subject property] an income-producing farm," "Does the railroad track that the subject and all comparables are near, affect the subject more," or, literally just today, "Is the subject attached..." Well, the pictures of the outside, and page 1 and 2 of the report all say detached... so, no. A good underwriter asks good questions to assess risk - a bad underwriter asks stupid questions to justify having a job.
Title Agent - this is a third party hired by the lender, and rarely are they a cause of delay. The title company's job is to ensure that the property in question is free and clear of any other debts. In my career, I have only once had a title agent slow a process, and it was a basic misunderstanding about an address pre/post 911 classification.
Closing Agent - If all the other parties have done their job, this person's life is a breeze... if not, you're gonna have a bad day. Their job is to facilitate the closing process, and here I'll address volume. With record levels of refinancing recently, there are still only a limited amount of hours in a day. Questions to ask would include, what is your average origination to closing time frame currently? How many closings are you doing per day (if this number is extremely high, you can expect to have a long wait)? And all of this volume and stress is a recipe for mistakes, and mistakes mean delays.
Help your lender, help you.
Disclose EVERYTHING upfront.
Stay in regular communication.
Provide the required information in a timely fashion.
If you do this, you've got a good chance at a timely and smooth closing. If you don't, you may join the properties on my desk that I've been waiting 4 months for the lender to give me instructions on how to proceed, because someone didn't disclose the hoarder status of... but that's for another blog.