How to Save Money and Close Your Home Loan on Time

By Sheryl Landrum
Home Worth Columnist

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As lending restrictions have tightened for those wishing to purchase a house or refinance their home, it can take longer to get home loans approved and escrow closed. Underwriters now ask for seven days to review home loan packages--up from one or two. For applicants who wish to buy a house, deposit money can also be on the line when the buyer doesn't meet certain deadlines (for loan approval, for example) and close on time.

Don't Dally on Paperwork When Buying or Refinancing a Home
When you make an offer on a property, prepare to move right away once your offer is accepted. This applies doubly for short sales (which involve dealing with a bank and can be a nightmare to close) or desirable properties at good prices (which may get back-up offers).

If you are very smart you will have gotten yourself pre-approved with your lender before making offers on property. With that out of the way, to close on your sale within 30 days you need to get your purchase paperwork to your lender right away. The lender can get your appraisal ordered and take care of other property issues, such as checking out the homeowners' association, getting septic, well, or other inspections, and dealing with unexpected requirements like the need for insurance if there is a private road.

Putting off getting preapproved and getting your paperwork in can cost you deposits held in escrow, cause your interest rate lock to expire, and even  keep you from getting the property. For example, an applicant who didn't get his loan started quickly enough missed one deadline in the escrow process. Because the seller had a backup offer that was better she was delighted to cancel the escrow and sell to the other buyer. Don't lose a great deal by moving too slowly.

What Your Lender Needs to Close Your Home Loan
Full documentation has become very popular once again. If you are looking to refinance or purchase a home and need a mortgage, start putting the following together as you will likely need:

• The last 2 years tax returns if self-employed, retired, or a paid on commission.
• The last 2 years of W-2s
• Two consecutive pay stubs
• Two month's bank and asset statements on accounts used to support cash on hand--ALL PAGES
• Any letters explaining credit issues that may show up on your credit report
• Any gift letters or loan deferment letters
• Copies of current rental contracts if you are refinancing an investment property

Whether you are buying a home or refinancing an existing one, you can save yourself, your lender, real estate agent, and your escrow officer a lot of stress if you have prepared yourself. By taking care of business early, you can increase your ability to close escrow on time and secure the home loan and the interest rate you want without an additional outlay of money.


About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage of San Diego at the Prudential Realty Office in Bonsall, California.