What are some key tips and common pitfalls to avoid when closing a residential loan?

Question

I’m about to close on a residential property and want to ensure everything goes smoothly. I’ve reviewed my Closing Disclosure and gathered all necessary documents, but I’d love to hear from those who have been through the process. What are the most important steps to focus on? Are there any specific things I should double-check or potential issues I should be aware of? Any advice on how to make this process as stress-free as possible, would be greatly appreciated!

Carlos Valencia · Answer

Hello Maria,

Depending on your file will depend on the stress of the process. If you are a borrower with a w2 income and no other properties only basic liabilities your file should be very straight forward. Just make sure not to open any new unsecured debts, or change jobs. Other than that all the underwriter needs to verify is your income, assets, and liabilities to make sure you can pay for your mortgage and low risk of defaulting.

@Albert Bui @Matthew Kwan

Patrick Roberts · Answer

If you've received your CD, most of the work is done. Are you still working to satisfy any Conditions/Stips (such as providing documents, etc)? If so, speed/sense of urgency is probably the most impactful thing you can do. Getting documents and info to your lender asap allows them to review and address any potential issues before too much time has elapsed.

As an example: the lender asks for a payoff letter for a credit card or some other debt so that it can be paid off at closing. You get distracted and wait until 7 days before closing to ask for the payoff letter because that's plenty of time to email over a pdf, right? Surprise -the creditor providing the payoff says these orders take 5-7 business days to process and complete. Once it's provided, your lender will need a day or two to update everything with the loan because they cant balance the CD without the updated payoff info. This has become a process that could take 8-9 days to complete, and closing is supposed to be 7 days away.

The other thing I would say is to double check all of the figures on the CD to make sure they are accurate. If something isnt right, address it with the lender now - not the day before/day of Closing.

Clayton Silva · Answer

The process never seems to be stress free no matter how many transactions you do.  I would just try to enjoy the ride and learn as much as you can along the way.  Document everything so you can streamline the process in the future and learn from any pitfalls along the way.  Really your team are going to be what make a transaction smooth (realtor, lender, insurance agent, title agent, etc).  Lastly, to make it easy on the lender, I would recommend making sure you upload clear, legible, PDF files for documents to save the hassle of having to do multiple requests for the same thing.  Best of luck and wishing you a smooth closing!

Albert Bui · Answer

Like @Carlos Valencia mentioned, its good to consult with your lender to see what else is needed prior to reaching clear to close or CTC on your file. This is the stage of the process where your lender can issue your loan docs out to escrow/title/settlement and these folks can schedule your signing for closing.

Before it can reach CTC you'll need to make sure all income/assets/credit remain the same so that means no changes to your credit that are bad or adverse, no job or income changes ideally, and hopefully those funds you've set aside to close with are still "there," so we can keep this closing on track.

If you had any questions left feel free to fire them off.

@Matthew Kwan

Robin Simon · Answer

Get as much understanding and disclosure as possible on the closing fees and escrows that will show up on the settlement statement - including stuff like prepaid interest ("stub interest"), tand and insurance escrow holdbacks, etc - biggest pitfalls we've seen are people not 1000% clear and aware of these things then getting very negatively surprised at the day of signing

What are some key tips and common pitfalls to avoid when closing a residential loan?

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