When shopping for a new home, there are a number of obstacles that you’ll face -- timing, personalities, market upheavals, and more. The usual prescriptions for these issues include deep breaths, yoga, and small-batch bourbon, but a little foresight and planning can help you overcome some difficulties before they even rear their ugly heads.
A smart plan in two key areas can help you circumvent stress and move swiftly toward closing.
Process Hiccups: Organization is Key
The standard mortgage pre-approval process requires minimal documentation with a cursory review of financial and employment history as well as a quick glance at your credit report. That means that for some home buyers, the mortgage underwriting process can hold many surprises -- none of which are fun.
Restructuring a previously pre-approved loan will typically add up to a week to the underwriting process. In extreme cases, unexpected findings that severely decrease the borrower’s financial fitness can result in the loan being outright declined.
To ensure that your underwriting process is as smooth as possible and that you are ready to handle any of the questions your underwriter might pose, we suggest you do the following:
Gather all of your necessary documents and organize them for easy access.
- Scan documents with either a scanner or a scanning app and save them in clearly labeled folders in DropBox, Google Drive, or another secure cloud-based storage solution.
- Be truthful throughout the process. If you’re concerned about something, it’s better to be forthcoming with your lender than to wait for it to be discovered during underwriting.
Most lenders will unintentionally ask you to submit the same document multiple times – be prepared for this.
- Remember that there are many players in this process and that an email can go unread in a crowded inbox. Don’t get upset or take it personally, most mortgage companies are not equipped with advanced document management portals. The best way to handle this is to keep your files very organized and to be ready to re-send them at a moment’s notice.
Consider using a mortgage lender that has a streamlined end-to-end digital process.
- While some lenders like to tout their lightning fast online application, that’s often where the digital process ends. Supporting documents are still required in paper form and the backend process is still antiquated and traditional, creating unnecessary and time-consuming hassle and inconvenience.
- Choose a lender who offers superior organization and streamlined processing by leveraging technology throughout the process. Very few lenders nationwide have this capability (Neat Capital is one) and it is a game-changer in terms of timing, security, and efficiency.
Negotiation Reboot: Inspection Discoveries
A recent study showed that almost one third of real estate deals face delays – primarily due to financing issues, home inspection and appraisal –- and that of the deals that ultimately fall through, findings during the home inspection play a major role. For many buyers and sellers, the home inspection process becomes the most personalized and emotionally laden part of the home purchase as sellers feel that their home is being unfairly criticized and buyers feel that the sellers are trying to “get away with something.”
In reality, the fault may lie with the home inspector. Many get paid a hefty fee and feel that in order to “earn” that fee they need to come back with a bulky report detailing every possible potential problem in a home.
While thoroughness is a virtue in many respects, buyers need to be realistic about what they can expect and what they can demand of sellers. Did the inspector find non-functioning appliances or dangerous problems? You can certainly expect the homeowners to take care of these.
Purely cosmetic or preferential requests, however, will be more difficult to justify and could serve to poison the negotiation. In fact, if sellers believe you are being unreasonable in your inspection repair requests, they may decide to move on to another buyer who will be only too happy to overlook a minor cosmetic issue in the current low-inventory, high-demand markets.
Think through your requests ahead of time and see if there are options that can help you limit the number of deal-breakers on your list. Especially if the report comes back with some small, easy-to-DIY items, it’s probably worth overlooking them in the interest of maintaining a good relationship with the sellers.
Time To Get Moving!
The good news is that two of the biggest hurdles to a quick closing are things that you have a lot of control over. When you are organized, thorough, and have a plan, you can sail through to closing -- and that can make a big difference in competitive markets.
Neat Capital’s digital mortgage technology and real-time underwriting platform will drive you straight to the finish line. After all, our average time to clear a file to close is 3x faster than the industry average.
That’s one less thing to worry about before closing. Now get back to yoga, because you’re in exactly the right position to buy the home of your dreams. Start your application or talk to one of our lending pros to get moving, and don’t forget to ask about our Platinum Pre-Approval letter, which allows you to compete against all cash offers.