The Loan Nightmare
A buyer finds the perfect house and as a real estate agent, I put in an offer. The offer is accepted and the dreadful part begins: dealing with the bank. A decade ago, loans could close within 45 days. Today, it is 45 days, plus a 15-day extension … and then another 15-day extension. My buyer’s end up living out-of-pocket in a hotel that entire time and does the bank care? No.
I recently had an experience where my Buyer’s were quoted $5,000 closing costs on a VA loan for a $200,000 house. I nearly fell out of my chair. I was grasping, white knuckle clinging to the edge of my seat, as I gasped and managed to form an audible sentence, “Have you met with other lenders?”
The answer was “no” and I urged them to meet with two other lenders early the following week. I set up appointments for them because I knew $5,000 in closing costs was not in my clients’ best interests.
The next week my clients called me after they met with two different lenders and they were approved for $215,000 and only required $700 in closing costs, no origination fees and no points. I felt better and the suffocating feeling in my chest immediately diminished.
So why does it take home loans so long to close?
The first excuse banks’ give is volume. They claim there is too much demand. I stop at nothing to help my clients. Even if it is 11:30PM at night, I respond to emails, texts and phone calls. Unfortunately, banks only want to work 8:00AM to 5:00PM. They can accomplish little within those set working hours.
There is a lot of front-end incompetence. Work with an experienced real estate agent who can explain that a loan officer will require paystubs, W-2s, bank statements, tax returns, etc., to receive a pre-approval letter and apply for an application.
Always work with a loan office you can reach and not a 1-800 number. Transactions need personalization so fires are easy to light when necessary to get the ball rolling.
Unfortunately, government regulations make it extremely difficult to complete transactions on time. The government requires mounds of paperwork, underwriters that have to comb through every background document and nitpick every detail.
If these lengthy guidelines do not work for some buyers, there are other hard money lender options available. As direct lenders, they can easily loan funds within days instead of months. These types of lenders are more straightforward for complicated real estate transactions, such as apartment building loans, commercial building loans, commercial construction loans, commercial property loans, real estate development loans, residential home bridge loans and merchant cash advances.