What’s the (mortgage) hold-up? Part 2

I’m back with a follow-up to Monday’s post.  The way the real estate market has slowed, you would think lenders would be just waiting to pounce on and approve the next loan that comes through. You would think the processing and underwriting turn times would be faster for processing a loan, underwriting, drawing loan docs, and closing loans. You would think loans could virtually fly through the home-buying process. You would think all that, and yet you would be wrong.

Here are a few more reasons why I see delays this day:

 Reason 5: Declining Values and Appraisal Problems

Declining property values over the last few years have created more work for the appraisers and those who review them. This extra work is required to make sure the lender has a sound investment. Lower values can mean higher LTVs and more challenge structuring a loan that will work. Agency guidelines sometimes call for desk or field reviews of an appraisal, adding extra time to the process.

 Reason 6: Bad Lenders

When we save loans from falling apart it’s usually because another lender did not ask all the appropriate questions or understand the buyer’s needs and how to structure the loan. Or, perhaps they did not properly explain the requirements in today’s lending environment. It could be someone inexperienced, incompetent, unprofessional, dishonest, uncommunicative, or otherwise unable or unwilling to do the job.

Reason 7: Changes and Restructuring a Loan

Changing a loan program because of restrictive guidelines, conditions or buyer qualification can delay a closing many weeks. When a buyer cannot, or refuses to provide a loan approval condition it will create more delays. And, if the loan had already been underwritten and the original request denied, or a condition substituted, it must then go back through the underwriting process as a new loan. Remember, it’s not one item that an underwriter reviews; it’s the combination of many factors that assist the underwriter with their decision and risk assessment.

 What can you do about potential delays?

There are some things that you can do to minimize the disruption, delays and stress. First, work with a knowledgeable and experienced lender. This is no time to hand your business over to someone who just got into the business. Second, be flexible. Write your contracts with 45 or 60 days to closing. And finally, as I mentioned on Monday– have your paperwork ready to go!

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