Worried Your Loan Won’t Close on Time?

I received a question from a home owner who is refinancing. In the past, he went through a nightmare with his loan closing late, and he doesn’t want that to happen again.

He wrote: “My loan officer knows my concern and he keep ‘verbally’ saying it will be completed in 45 days – I just have had experience that it always goes longer and just wondering if there are anything I can get from him that would have more teeth and more motivation for him to ensure it does close in 45 days – i.e. without me babysitting, getting frantic and calling everyone every other day because 45 days is next week (you know how that goes… and I don’t want to go through that again with any loan ever – and just have it leisurely close on its own in 45 days would be refreshing.”

My reply:

There is only so much any of us can control… you, me, the loan officer. There are multiple things that can go wrong in the middle of the loan process that can cause a delay, so the best thing you can do is to make sure you’re doing everything in YOUR power to prevent that. For example, get all the required documentation to the loan officer on the same day he asks for it. Expect to receive requests for letters of explanation from the underwriter in the middle of the process, and get those letters done and submitted the same day. (These letters need to be only two to four sentences, so they are truly quickies. Ask your loan officer for help writing them, if needed.)

Don’t be a pest, because nobody likes to be micro-managed. It’s insulting and off-putting. Expect an update weekly. Feel free to email or call for the weekly update if it doesn’t come automatically. There will not be news available on your loan on a daily basis.

Since this is a refinance, you don’t have a real estate agent that will be in contact the loan officer, so that is one disadvantage for you. Also, underwriters favor purchase loans over refinances when it comes to deadlines, because purchase loans are contractually obligated to close by a certain date, and people have to move out of homes, etc. With a refinance, it’s not an emergency if your loan closes one day late: that is the attitude of the underwriters, so your loan officer has that challenge.

Nevertheless, your loan officer does have a personally vested interest in getting your loan closed asap. Unlike the underwriters, your loan officer is not on salary and gets paid only if and when your loan closes. So he is truly on your side. And this brings up a possibility…

Loan officers work on commission, or you might say, for rewards. You could offer your loan officer a reward for closing on time. You’ve heard the saying that honey is more effective than vinegar? If it’s truly important to you to get your loan closed by day 45, then you might email your loan officer that you are trusting him and that when your loan closes on time, you promise to write him a glowing thank you letter that will include a gift card to Amazon.

Notice how I phrased that to be polite and respectful, not insulting.

One last thing. There are events that occur that none of us can control. If the appraiser drops dead before he completes the appraisal report, if there is an earthquake, if war breaks out, your loan might be delayed. This is why there is no such thing as a guarantee that anyone’s loan will close on time. Good luck, and let me know how it goes.

Feel free to chime in and add your own comments and ideas.