Helping your lender is critical when you are under contract to purchase a home. This may seem like a no brainer, but often times it is easy to put your lender on the back burner once you go under contract. Most buyers feel that now that they are under contract most of the work is complete because they have already been pre-approved (hopefully). All financial documents have been sent so there shouldn’t be much more needed except the inspection and appraisal. Wrong.
Your lender will gather all the needed financials and documents for pre-approval and now that you are under contract it will be sent to an underwriter for FINAL approval. A good lender will definitely do their due diligence and get as much documentation needed that they feel the underwriter will want BUT 99% of the time the underwriter will have further financial/documentation requirements needed.
This is where your help is extremely important and time sensitive! Any requests from the underwriter need to be addressed quickly. You are on a timeline. Remember the purchase contract you signed and the seller accepted? Remember your earnest money deposit? Your loan objection deadline is when your loan needs to be approved and if it is not approved by this date, you can lose your earnest money and would be in jeopardy of falling out of your purchase agreement!
What this means is that all items needed for underwriting need to be submitted and cleared prior to this date! Sending documents to your lender REGARDLESS of inspection or appraisal being completed and/or if having inspection/appraisal issues this is again critical.
Many buyers think that if their inspection and/or appraisal doesn’t go well then there is no need to continue working on their loan approval. They tend to feel this way because if inspection comes back with issues and they choose not to continue with the purchase then they feel why is there a need to get final loan approval. Seems to make sense right? Wrong. Here is where you need to separate the home from the loan. The reason for this is because if you put a hold on getting items to your lender to send to the underwriter for your loan, and you decided to move forward after the inspection and/or appraisal, then you would have lost valuable time in getting your loan approved. Again, this means you could be in jeopardy of your purchase contract and could put you at risk of losing your earnest money as well as the purchase.
Here is the thing, even if you decide you don’t want to move forward because of the inspection and/or appraisal, you won’t be purchasing this property, BUT, you will be looking for another property, correct? So in sending those needed items to your lender to get your loan approved will help you for the next purchase contract! Plus you will be ahead of the game, putting you in the position to possibly have a shorter purchase contract!
If you have any questions and would like to learn more please give us a call. The Mortgage Maestro Group @ Summit Mortgage Corporation is always happy to help. Looking to learn more on home inspection vs. appraisal, check it out here.