What happens if a mortgage lender fails to release funds to close on time? In Oregon real estate transactions, this happens more often than you’d think.
The short answer is: you can lose the house that you fell in love with. It would be a heartbreaker.
So how can this happen? Lack of communication between the parties, people not understanding the timeline from accepted offer to closing, not ordering the appraisal early enough, not going through the pre-approval process early enough, inexperienced professionals, etc. At the end, if the lender doesn’t send the loan document a minimum of 2 days before closing day to the escrow agent, everyone who is involved in the transaction are going to get very stressed. Trust me, nobody needs this– buying a house and getting ready to move is stressful enough. Doing everything early is a very good thing.
So what needs to happen before closing a real estate transaction in Oregon? If these don’t happen in this sequence in the last 4-5 days, the chance of not closing goes up. I’ll list in reverse order (weekends and holidays don’t count here):
Closing day: You get the house key! Bring sleeping bag, order a pizza (or quinoa salad), open a bottle of wine or champagne.
Closing day around noon: Escrow agent records the transaction with the county recording office.
Closing day -1 (I prefer at least 3 days earlier): Buyer signs closing documents at the escrow office. About 40 minutes of shuffling papers and signing a bunch of papers (a nice pen will help).
Closing day -2 (Closing Document review day 3): Loan documents are sent to escrow and escrow prepares the documents for the buyer signatures.
Closing day -3 (CD day 2): nothing can happen, so might as well call the utility companies and request service under your name as of the closing date.
Closing day -4 (CD day 1): Buyer receives closing documents from lender for review. Buyer can only sign after 3 business days from the day receiving this closing disclosure.
Here’s a list of things you can do to minimize a potential delay of closing, so you don’t stay at a hotel or Air B&B:
1 Work with an experienced and reputable real estate agent who can foresee and prevent any potential issues.
2 Work with a reputable lender who has the track record of successful closings.
3 Go through the loan pre-approval process thoroughly in advance (before making an offer).
4 Complete the loan application as soon as you have an accepted contract.
5 Order the appraisal during the inspection negotiation period, so that the appraisal happens soon after the repair negotiation is finished. But make sure the the appraiser doesn’t inspect the house during repair negotiations (you may end up paying for the appraisal and potentially lose the leverage of the negotiation.)
6 Submit all lender required documents (pay stub, employment verification, etc) early.
7 Don’t buy expensive items that could affect your debt to income ratio or your credit score.
8 Keep your job:)
Call Shawn at 503-515-4499 for a smooth real estate buying experience.