Renting a home used to be less expensive than to own one. But this is no longer the case in the United States. According to reports, rents are rising more and more but mortgage rates are not. This is the reason that the current real estate market is hotter than it has been in years. The widespread opportunities of loans with no down payments, low-interest rates and high rates of approval from lenders have created an environment where buyers outnumber sellers.
So, when you are planning to buy your dream home in a tight market like this, it is important that you close a deal quickly. You certainly do not want to lose an opportunity just because you were not ready to seal the deal.
Quick closing can also help you get low mortgage rates. When you can close a deal in less than 30 days, chances are you will get lower mortgage rates than if you need 45 days or more. But, to be ready to close in less than 30 days is challenging as well.
Here are a few tips to help you speed up your closing process.
- Know your paperwork requirements
When you are applying for a home mortgage, you will need to get your required verification documents ready. It often happens that the lender asks for a particular document but the buyer doesn’t have it and sometimes it takes weeks to get that particular document ready.
Therefore, complete your paperwork requirements as soon as possible. You can ask your lender beforehand to make sure that none of the required document is missing. Common paperwork includes your two last bank statements, W-2 statements, two recent pay stubs, and federal tax returns from the past 2 years.
Apart from this, have a copy of the social security numbers of all the people who will be listed on the mortgage application.
Having your required paperwork ready can really help in speeding up the closing. Moreover, it also leaves a good impression on your lender and can increase your chances of getting a fair deal.
- Pull Together your Financial Information
The most important way to keep your mortgage process going in the right direction is to keep your financial information on hand. You should apply for pre-approval as soon as possible because homeowners with pre-approved loan in their hand can reduce their closing time with a week or more.
This practice will also give you a better idea of how much you can afford and what type of property you should be looking for.
- Preview your Mortgage Credit Score
Almost one-in-four consumers have a rookie mistake in their credit score which reflects badly on their mortgage application. Finding such a mistake while your loan is in under-writing is definitely not a good time.
Therefore, review your mortgage credit score before applying for a mortgage loan. Find any discrepancies in it before your mortgage loan goes in under-writing.
Reviewing your mortgage credit score can also help you to figure out how much you can afford and what type of loan you should be looking for. For example, if your credit score is somewhere between 580 and 620, you can be definite that you should be looking for FHA backed loans.
- Make Informed Budget Decisions
Making informed budget decisions is a really important task if you do not want to create any disastrous financial situation once you have closed your mortgage deal. For this, determine how much monthly mortgage payment you can afford after you are done with the closing.
Also, make sure that you have enough money saved after the down payment to help you with the closing costs.
Knowing what you can afford from the beginning will help you from wasting time in looking for the houses that are out of your budget.
- Stay in touch with your lender
Another good approach to close quickly on your mortgage is to stay continuously in touch with your lender. Mortgage under-writers cannot do their job without you, so the best thing you can do is to remain available when your loan is in process. Respond quickly to the additional paperwork required by them.
If the under-writer or lender cannot reach you to fulfill a specific requirement, your application will most definitely move to the end of the pile of applications and the process will be delayed by weeks.
- Use Digital Options
With the advancement of technology, many lenders have moved to the online applications and assessments of your financial information. Take advantage of these digital advancements to fasten up the process.
Allowing your mortgage lender to contact your bank directly to verify your financial details can really help in saving days of issuing and submitting the required paperwork. You can also e-sign your documents now which literally saves weeks for both lender and buyer.
- Ask what you don’t know
Never hesitate to ask something you do not understand in the process, especially when you are making such a great investment of your life. Do not sign any document until you fully understand it and the consequences it brings.
Ask your lender about the terms you do not know. If there are any discrepancies or something is missing in the documents, ask your lender to correct it as soon as possible.
- Avoid any life changes while your loan is in progress
Mortgage lenders do not like to approve loans more than once. Once your loan goes in under-writing, do not make any life changes that can affect your loan application. These life changes include changing or quitting your job, changing credit cards, making a sudden big deposit in your bank account, buying a new car, or alerting the source of your down payments.
Such changes can make you closing process really long or in a worst case scenario, the lender can even dis-approve your mortgage request completely.
If you still have to make any such changes, discuss it with your lender beforehand. It will be worse if it comes as a surprise.
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