There’s nothing like a dose of reality to bring back to the classroom.
Topic: Funding and Closing
Conventional wisdom: Contract to close requires plenty of attention to detail, an unending supply of persistence, and a willingness to sometimes stick your nose in where (some might say) is doesn’t belong.
Reality: When working with even the best of lenders, stuff happens. There’s a lot to understand and communicate-especially when qualifying for and working through underwriting in a government-backed loan program.
In the beginning, the order of things (what will happen when) seems clear, The criteria for qualification do too. The information the borrow needs to provide is a simple list, right?
Well, sort of…
In fact, funding and closing can be stressful no mater how thorough the preparation. What can happen?
- Typical last-minute underwriting reviews and normal requests for updated financials from the buyer
- Uncertainty about the exact amount of funds due from the buyer at closing. If the number changes at the last-minute–well, be ready for it to happen. Try to have a handle from your lender or escrow company about the range of change possible
- Be prepared for insistence on wired funds to escrow (as opposed to any other form of payment) because wires take time to generate and there will be no funding until the wired funds are received.
- Insist on seeing a preliminary HUD-1 statement from the escrow company. You will have a chance to see any numbers that have changes from the Good Faith Estimate–probably before anyone else tells you.
- Avoid end of week closing dates because if everything does not fall into place, you’ll be waiting through the weekend before the final shoe drops and you own the property.
- Show your loan officer some love–they have a stressful job themselves. Many are every bit as independent financially as a real estate agent. They have to close to get paid just like the real estate agent. And lenders’ administrative assistants get to take vacations too, and you won’t know the impact of that until you see the whites of your loan offer’s eyes–or their hair standing on end struggling with last-minute messages and paperwork.
So, a word to the wise real estate instructor–bring your customer experiences back to the classroom and share them. No amount of warnings and case studies in course material are a substitute for what happened in your last transaction!
PS – It all turned out just fine. I counted the number of real estate, escrow, and lending people who were hands on in the “normal” final days–8 people, at least.