Behind the Scenes with your Home Loan

Guest column by Cindy King, for The Bend Bulletin Special Projects

Now more than ever it is imperative that borrowers, sellers and Realtors involved in a financed purchase understand the loan process and how the chosen lender will work in delivering a loan on time.

So many twists and turns happen behind the scenes, and if your lender or banker is not on top of your file, you as the buyer may pay a steep price in missing loan locks, missing closing dates and sometimes even being homeless between occupancies. Sellers? Sadly, being fully prepared with your moving van and home packed and then having a two-week extension … well, I just don’t like thinking about it!  You may be living with Uncle Joe until your sale actually closes.  When I got into the real estate business in the mid-1990s my mentor, Steve Scott, beat me over the head about what lenders do and what they do not do. Many an office meeting broke down the processes involved with financing, ideas of issues to watch out for and questions to ask throughout the loan process in order to have a solution to a problem even before you need it.  A lender is essentially a loan arranger. Your loan arranger is gathering and assembling very important data from you. That person is your main point of contact throughout your financing journey. Always be upfront and honest with your lender. Always

From the time you sign your loan application, your lender sends your file to their processor. Generally mortgage loan processing takes place within five to 20 days from the date of application on the mortgage loan. The processor needs to get their work done before it’s submitted to underwriting.  Once in underwriting the mortgage underwriter will then verify what you’ve told your loan officer regarding your salary, debts, savings, etc., and review your file as if it has lice. That fine toothed comb is never finer than at this moment in time.

The processors and underwriters carry the responsibility of verifying your data to help approve your loan; yet they also have the responsibility of protecting the lender by ensuring the loan is safe enough to grant. The entire process now takes anywhere from 45-60 days or longer, depending on your financial situation, job status and other factors.

One of these “other factors” could be your appraisal. Your lender is required per the real estate sales contract to order the appraisal within the time specified for your property inspection. If your lender disagrees with that and says it’s OK to wait until the inspection is done, have them call me. Actually they can’t call me unless I’m an agent that is involved, but that answer is incorrect. They need to get the appraisal order in, and they can always cancel it later should a property inspection cause the deal to go south. Appraisals still aren’t as fast as they used to be, and by the lender delaying putting the order in, you could pay the price.  It’s just not worth it.

Surprises can come along at any time. One way to help combat last-minute surprises is to continually follow up with your lender about the loan status. Ask lots of questions! If they are not updating you on a weekly or bi-weekly basis, call them. Ask your lender how the loan processor is doing right now? Do they need anything more from you? If your file has been processed and it’s with the underwriter find out where it stands in underwriting! Do not be shy — this is a big deal.  If you get “It’s all good ... no problems!” without any specific details, consider your loan in muddy territory.
Listing brokers have full authority to contact a buyer’s lender and ask about non-confidential loan updates, as does the buyer’s agent. If anyone at any time suspects there may be a delay in closing it is imperative to notify all parties and get that extension in writing. With the new lending rules that brokers and bankers must follow, last-minute extensions can cause one- to two-week delays in closing. Sooner is always better than later.  By having all of your information at your fingertips (this is hard for my fun-loving clients who consider filing sheer torture) you are assisting your lender tremendously, ultimately helping everyone move on with their lives in a timely manner (no pun intended, but kind of).
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Why does it take so long to get a loan these days? Well, why does it keep snowing?!? It is what it is, and we have to deal with it. We can’t change the weather and we can’t change the loan processes; but all parties to the transaction can be proactive and aware by paying attention to the process.

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