Unfortunately, it doesn’t take much to delay a closing. The good news is that most mistakes are completely avoidable. Here are some simple mistakes to avoid.
Missing Financial Details
Although lenders begin by reviewing the borrower’s financial information, oftentimes small pieces of the puzzle can be missed. When borrowers fail to provide lenders with every necessary detail, their financial profile is considered incomplete and will cause a delay.
Many borrowers fail to provide lenders with every required piece of documentation. These commonly include, but are not limited to the following documents:
- Two years of tax returns and W-2s
- 30 days of pay stubs
- Year-to-date financial statements for self-employed individuals
- Two months’ worth of statements for any asset accounts
- Paper trails and explanations for all deposits (and withdrawals) above $1,000
- A full financial statement for each home or business they own
Mixing up Approval and Pre-approval
Many borrowers misunderstand the term “pre-approval,” and treat it as a loan approval. Just because they have met with a lender and provided some documents does not mean that they are approved. Before agreeing to any offer to buy a home, a borrower must first get their loan approved by an underwriter.
One of the greatest side effects of the TILA-RESPA integrated disclosure (TRID) is miscommunication and a lack of information sharing between mortgage lenders and real estate agents. When these two key players in the transaction aren’t on the same page, delays are inevitable. Lenders and realtors must work as a team to establish important deadlines and work them into the contract.
Uninformed about Rates
A perennial problem in the mortgage industry is borrowers who are uninformed or unrealistic about what they can afford. Lenders and realtors must give buyers/borrowers the truth upfront. Thinking that it’s better to be safe than sorry, many lenders are even slightly inflating estimates in order to factor in the possibility of future rate increases. This helps prevent buyers from getting in over their heads.
Lakeside Title Company: Your Partner for Maryland Title Insurance & Closing Services
Lakeside Title Company’s Corporate location is in Columbia, Maryland. A title insurance company that serves builders, lenders, and realtors in Maryland, Washington D.C., Northern Virginia, and Southern Pennsylvania. We close over 4,000 transactions a year from 14 different locations. Visit our homepage today to learn more about our services and to get in touch.
If you have a legal question for an attorney, please contact Lakeside Title Company’s affiliated Law Firm, Deardorff, Rath & Pichon, LLC.