Timeline of a Purchase Loan: Controlling the Process

As a Realtor you have a lot on your plate and the last thing you want to do is worry about the lender. Unfortunately, if the lender blows or delays the deal it taints the whole transaction and affects your ability to get referral business even if you did not recommend the lender.  Buyers are choosing their lenders often before they ever meet you, so you may not have the opportunity to refer them to a trusted lender**. 

Home Loan Timeline

This is an acceptable lender timeline vs my team comparison.  It is important to note that my team is unique. This is not normal in the industry but is a large reason why my files move so fast. I have this on here so if a lender pushes back you can literally quote what my team does.   My entire team is incentivized to move the file fast, so the buyer is relaxed and never worrying.  If you are seeing delays beyond what is acceptable you should have a reliable lender ready to step in.  Assuming the lender knows what they are doing is a mistake unless they are a known and trusted entity.  Check for reviews on the lender on places like Zillow and Yelp.  At the bottom of this timeline I have a sample email that is worth sending to the lender DAY ONE with the purchase contract.  That email sets up your transaction, so the lender knows you are watching and there are zero excuses.  

Initial disclosures to borrowers:

Acceptable:   Within 3 days of contract acceptance                                                   

My Team:  Within two days of contract acceptance                       

When to panic: It is over 4 days and your borrower has no disclosures

Appraisal ordered:                                            

Acceptable:   Within 3 days of contract acceptance                                                   

My Team:  Day one. Ordering the appraisal day, one is critical to keeping the loan moving fast.  I don’t want my buyers having to pay rush fees for an appraisal and appraiser’s availability can differ based on volume and timing so ordering day one insulates the buyer from these factors.  It gives us room to breathe in case an appraiser is on vacation etc…                          

When to panic: They say they can’t order it until some date in the far future.  For example, if they cannot order until the loan is approved that is not normal for the industry at all and you should be concerned they are not confident in the buyer’s ability to qualify. If it is a broker, they could be trying to find someone who will do the loan.   A future appraisal order is a red flag the borrower has issues. 

Not ordering appraisal until after inspections:

Guaranteed Rate will actually pay for your next appraisal if you back out of a house because of the inspections.  You pay for the first, We pay for the 2nd.  This is as of September 2019. Check for details as you could be reading this in 2021. No excuse to not order appraisal upfront.

** Every area varies on what is normal in terms of how quickly you can get an appraisal back.  For instance, in San Francisco I can get it in 48 hours with a rush if I need it.  In more rural areas it is generally at least 7 days even with a rush. Certain states it can be 15+ days. 

Timeline of a Purchase Loan

File to underwriting:

Acceptable:   Within 8 days                                                   

My Team:  By Day 5. Ideally day 3                     

When to panic: It has been two weeks and the file has not gone to underwriting.  Either the borrower is not giving up docs or the lender is not doing their job.   Either way you want to get involved.  A lender does not need the appraisal to send the loan for the initial underwrite on a purchase.  I am often getting everything cleared so that by the time the appraisal comes I am submitting for clear to close. 

** The borrower can have a huge impact on when a file goes to underwriting.  I had a client who gave me all her docs the morning my team requested them.  We had her file to underwriting the same day we disclosed it.  Yes, day one to underwriting.  However, I have also had borrowers who I have to email and call 55 times to get a paystub from and I have had to get the Realtor involved. Stalking borrowers is the worst and no matter how good the lender is sometimes we need the Realtor to help pressure the borrower to give us what we need

File back from underwriting:

Acceptable:  up to 72 hours (3 business days)                                                   

My Team:  24-48 hours.                            

When to panic: File has been in underwriting for over 5 business days.  Either the lender lied about when they submitted it, there is a problem, or their infrastructure is trash.  An exception to this would be a hard money loan or some niche financing.  All lenders even big banks are under 5 days right now.  

What to Expect: When a file comes back from underwriting there are always small additional items needed before the loan is “CTC” (clear to close).  Collecting these items should not take longer than 3 days and then it goes back to underwriting.  Same turn times above apply.

Doc drawing:

Acceptable:   48 hours                                                   

My Team:  24 hours                            

When to panic: You have been waiting for loan docs for 4days+.  There is no reason why unless there is an issue of some sort or they lied about when the loan was approved.  4 days to get loan docs does not make sense. 

Timeline of a Purchase Loan

Sample email to say to lender you do not know or a lender you think is slow on day one:

Dear Bob,

I am looking forward to working with you on John and Jane Do’s purchase.  Please CC me when you request fees from title and escrow as they may need a little nudge to get back to you fast.  Also, please list me as the appraisal contact and email me the moment you order. As the local appraisers get booked very fast it is critical the appraisal is ordered within the next two days.  If there are issues with this, please let me know.  If you have any issues getting documentation from the borrowers also, please let me know so I can help advise them of the urgency.  We are hoping to close a bit early so anything you need I am here for you.   I am looking forward to a smooth transaction! 😊

Lenders are not the enemy; a good lender is worth their weight in gold.  This timeline is not meant to shame lenders but rather to give you as a Realtor the power to get control of the transaction before it spirals if you are stuck with a less than stellar lender.   If you have questions, please feel free to reach out.

Thank you,

Jen

**A Special note on your trusted lender: Make sure who you are referring business to a lending Rockstar.  Don’t refer business to someone because they are nice and visit you every week or buy you drinks.  Your lender should not be a charity case or your barkeep. You want an expert not a salesperson. Your clients need an expert.  You should accept nothing less.  Also, check their rates every so often.  You would be horrified how out of the market some lenders are on pricing. If you are sending your clients to someone who is gouging your clients, it does not make you look good. 

Equal Housing Lender

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