I am purchasing a house. I just received my mortgage commitment, how soon should I anticipate closing?
Some of that answer depends on what the commitment says. Some commitments contain a lot of contingencies, such as having the house appraised for a certain value. Some commitments are issued after the bank has done all their needed inspections, and are a better gauge of time frames. If your commitment states that it is subject to the appraisal, inspections, and acquiring documentation, like your employment history, or tax returns, it’s really a conditional mortgage, and you are not ready to close.
If you receive a commitment without those contingencies, then you are closer to getting an actual closing date. The bank process goes through several phases; first is your application, taken by someone at the bank/broker’s office. This is the person that you have a face to face connection with. Once they have collected all of the information, they will happily tell you that you are ready to go, because in their area you are, however, they now hand the whole packet over to an under-writing agent. Someone you never see, and rarely, if ever, get a name. That person takes the packet and reviews it, (and, I believe, promptly loose items in it, which is why you get a phone call asking for things that you have already given to the bank…always keep a copy of what you have given to the bank, because you may need to send it again), they then find money to fill your request by contacting banks, broker houses and finance houses. Only after the money is found and set aside for your loan request, can the whole packet move forward. And where does it go? It gets handed to a closing agent. The closing agent is responsible for making sure that the packet has everything in it, that all the contingencies are met, and that title is ready to close. Only then will the closing agent issue a ‘clear to close’. When you receive a clear to close, then, you may close your loan.
Now in the mean time, the Seller’s attorney has been notified that the commitment is in hand. Based on this, they will prepare a closing title packet. This will include things like; water test, septic test, survey, redated abstract of title, proposed documents, title curatives, tax searches, sump-pump inspections, certificates of occupancy, and anything else that is required to show that the seller has a clean title. Once this is done (an remember is takes at least 2 weeks for a survey, so there is a time delay here), the title packet will go to your Attorney.
Once your Attorney gets the title packet, they will review it, and send all of it our for the title insurance that the bank is requiring. If the title insurance report comes back with any title issues, then your attorney will notify the seller’s attorney, who will have to work or cleaning up the issues.
Once the title packet is in place, it is forwarded to the Bank’s Attorney. That office will review the packet, and prepare all of the bank’s closing documents. They will adjust figures, and ultimately set the actual closing date…after they receive the clear to close from the bank.
Now keep in mind, you have two additional dates to be aware of. First is when your mortgage commitment expires. Generally about 25 to 30 days after you receive your commitment. If the mortgage does not close by that date, you will need to arrange with the bank for an extension on the loan so that you can actually close. Generally not a really big problem. The second date, is your rate lock date. This is the date by which, if you have not closed, the interest rate on your mortgage may change. If the loan does not close by that date, you will have to contact your bank and purchase a rate lock extension. That may be up to 1% of the total loan amount, so it can be high. That’s why that date is so important, and really must be adhered to.
As always this is a general answer, to a general question. You should always consult your attorney about the specific issues that surround your specific needs.
If you have a question for Attorney Kukuvka, please forward it to: Cynthia M. Kukuvka, Attorney at Law, 330 E. Main St, Palmyra, NY 14522 or cklaw@verizon.net