Ready, Set, Close?

Quick closings have seemed to be gaining popularity in the current housing market – especially in Central PA. The competition of cash buyers who often can close within a week or two have put pressure on buyers with financing to commit to being able to get to the closing table in a short amount of time. In many cases, the mindset from the seller’s perspective is “the sooner we can finalize things, the better.”

So how quickly can a mortgage transaction be processed? Well, the answer is, “it depends.”

There are a variety of factors to consider figuring out what a lending timeline looks like – no two borrowers and transactions are alike so of course it can vary.

Traditional agency programs – Conventional, FHA and VA that can be processed and underwritten by a lender in-house are the most efficient. Outside agency programs such as USDA Rural Housing, Pennsylvania Housing Finance Agency (PHFA) and Tenfold (formerly LHOP) have additional processing times since in most cases, once the lender is done with their approval, the loan file then needs to be processed and approved by the outside agency as well.

The appraisal timeline can be a moving target and heavily drive a closing date. With appraisers being an outside party in the transaction and independent firms, lenders have no direct control over their efficiency. Some lenders use an Appraisal Management Company (AMC) while others have their own internal pool of appraisers. Having an internal pool is usually a bit more efficient but there are also pre-established expectations for the appraiser to complete an order. Appraiser’s ability to complete an inspection and report are also going to be driven by the property type, the location and of course their current workload and schedule. Although the turn time of the appraiser order to receipt of the report can happen in a few days, a timeline of 10-15 days is often considered normal.

The borrower profile also is a significant factor in the closing timeline. Many loan officers are proactive and obtain full documentation in advance from a borrower – pay stubs, W2s, tax returns, asset accounts, etc. If a borrower can provide all that is needed for processing and underwriting of a file in a quick, efficient manner, then the workflow is much more efficient. No matter how much documentation is collected in advance, some unique borrower circumstances can often cause delays. Self-employment usually requires additional documentation. Other borrower situations such as separation and divorce, multiple employers, ownership of multiple properties, multiple asset accounts, gift funds, credit issues and more can add to the processing timeline of a loan file.

Working with a local, experienced loan officer can also create a greater opportunity for a more efficient transaction. Although we are migrating towards an electronic, paperless culture with mortgage processing, in many cases borrowers do need to bring documents to their loan officer and meet in person. This is easily coordinated if the loan officer is in Lancaster County or nearby – not too simple if they are located “somewhere” in the Midwest.

Ultimately a realistic timeline from contract-to-close is about 30 days. A “quick-close” can happen in 14-21 days and the customary timeline would remain about 30-45 days. Variables will always need to be considered with the previously mentioned criteria, individual lenders, as well as market activity and volume.

Dan Ranck

Mortgage Loan Officer

NMLS #140989

HomeSale Mortgage, LLC

NMLS #1054689

Direct : 717.271.2400 | efax : 866.849.4320

dan.ranck@homesalemortgage.com | www.danranck.com

Facts, opinions and information expressed in the Blog represent the work of the author and are believed to be accurate, but are not guaranteed. The Lancaster County Association of Realtors is not liable for any potential errors, omissions or outdated information. If errors are noted within a post, please notify the Association. Posts represent the author's opinion and are not necessarily the opinion of the Association.