One of the most common questions a loan officer is asked is, “How long will my loan take to do?” Of course, when hardly any documentation was required, loans took much less time. But now, with increased underwriting, documentation, and so forth, it is taking longer. And in some instances, much longer. Refinance applications and appraisal complications are holding up home sale closings, according to a recent survey. According to the report, the normal timeline for a closing is about 30 days. However, the survey found the timeline to be between 45 and 60 days.
Adding to the average time is the length of time required for short sales and sales of foreclosed homes. These have always taken longer to close, but since this component made up over 44% of the nationwide market in September they have really added to the timelines. The survey of 2,500 real estate agents found that one major source of delays among short sales is mortgage origination preapprovals, which sometimes expire before all interested parties agree.
Sales of foreclosed homes are encountering delays when property damage complicates the appraisal process. In many parts of the nation Realtors are saying, “Much more than half, and in some cases three-quarters, of all distressed property closings have been delayed because of loan conditions.” And in some states, like California, laws are further aggravating the problem by forbidding forced deficiency notes on short sales. Under the new law, “seconds are not willing to settle,” stated one California agent, adding, “Mortgage application timelines run out for the buyers waiting to receive acceptance, counter or declination.”
Experienced loan officers tell clients, however, that well documented loans can sail through the system – they see it every day. They are in the ideal position to tell borrowers what is required, and how long it should take to fund your loan.
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