Getting a property financed can be an overwhelming process. Sometimes borrowers overlook details or forget small but important steps that drag the loan process out (or even cause disqualification). Here are the common time sucking land mines (and tips to avoid them).
1. Issues with appraisal
Loans officially start when they are put into processing, which does not happen until appraisal reports are turned in or the app fee is paid.
Sometimes a borrower will schedule an appraisal when the property is not available or repairs/rehab are incomplete. If someone lives in the property and won't allow the appraiser access to the property, the loan will be delayed getting into processing or will cause issues during processing. This also applies if the appraiser arrives and finds the home in the midst of rehab.
Another bump in the road occurs when borrowers base valuations on little research. This usually leads to an inflated initial value. If the appraisal comes in lower than what the borrower expected, this will delay the loan process and can even halt it altogether.
To get the process rolling sooner, be sure to coordinate with the current occupants when scheduling your appraisal, ensure that all rehab is complete, as well as conduct thorough research into the value of your property.
Some borrowers don't start gathering the documents necessary to move the loan process along until their appraisal comes in. This will slow the process down tremendously.
To make sure your loan closes as quickly as possible, gather all necessary documents needed to proceed in the process before your appraisal is complete. That way you can turn them in as soon as your loan goes into processing and be ahead of the game.
3. Wrong policy type or amount
Obtaining hazard insurance is a very important component to securing a loan. Often the wrong type or amount of coverage is purchased, which will not only slow the loan down but also potentially change your loan parameters (up to and including disqualification).
Avoid this by making sure your hazard insurance covers 100% replacement cost and accurately calculating the cost of your premium.
4. Title issues
Liens, judgments, delinquent taxes and mortgage releases are all common things that show up on title which will take time to clean up and drag the loan process out.
Be sure to check your title for these before you start your loan. If you have any clouds on title, you'll want to clean them up asap to keep your loan on schedule.