Contract timelines are always tight in the current San Francisco market. That means that buyers are typically removing appraisal and loan approval contingencies within days of having offers accepted. If you’re not prepared to jump on the fast track to completing your purchase, drama can ensue.
Here are five ways to avoid major closing delays, courtesy of my colleagues at Guarantee Mortgage who presented at our Zephyr sales meeting this week:
1. Be ready to pay for your appraisal. In order to meet a fast appraisal approval turnaround, the lender has to order the appraisal immediately. You should be sufficiently committed to the property to pay for your appraisal within the first day of offer acceptance.
2. Don’t switch your bank accounts around. The lender will typically require re-verification of all money you wire into escrow for your cash balance. If that money is suddenly coming from an account previously undisclosed during your preapproval period, the lender will demand that you provide documentation for that account. The statements will then have to be resubmitted and reviewed by underwriting while time is ticking.
3. Make sure your cash balance is liquid and ready to be transferred to the escrow account. The lender will want to see that the balance of your down payment and closing costs have been wired into the escrow account prior to funding the loan. Best strategy? Wire in that cash balance a few days prior to close of escrow to ensure that your loan funds on time.
4. Watch the AMEX charges. Lenders are picky about American Express credit card balances. If you have a high balance on your AMEX, a lender may want to see proof that you have the money to pay off that balance in full. This proof of funds should be separate from the funds you’ll need to pay your cash balance and any reserves required.
5. Lock in your homeowners insurance early. You should select your home insurance policy no later than a week prior to signing your loan documents. The latter are usually issued about a week ahead of the closing date.