Closing Tip: You Want A Smooth Closing? You Better Select A GREAT Lender!
It goes without saying that you MUST select a great closing attorney (and staff) and real estate professional when putting together your TEAM to purchase a home. Do NOT, however, take your selection (or for realtors your lender recommendations) lightly. The fact is a great lender can make all the difference when it comes to finalizing your TEAM.
What many people do not realize is that the lender is more than the loan officer (also known as the loan originator or the person you know at the bank that is sooooo nice). While the loan officer generally is the face of the lender in many instances and plays a critical role, there are two other components to a lender that cannot be ignored – the underwriting and closing department. Below I will briefly address the role of each of the three members of the lending team that you MUST research before selecting a lender.
The Loan Officer: Generally, this is the person who is your initial, lender contact (they essentially serve as the quarterback for the lender throughout the closing process). This individual assists you with the loan application process and works with you to obtain the documentation that the underwriting department will need to finalize your loan. The loan officer MUST keep all parties informed throughout the process (i.e., sending emails to the realtors and closing attorney at each file milestones or regularly communicating throughout the closing process). I have found that many issues can be resolved if provided enough time to address them. Lenders seeking information late in the process (i.e., hazard insurance, another two years of tax returns, a letter from your employer, etc.) not only can add significant stress to the borrower, but can DELAY the closing (no matter how good your realtor and closing attorney are).
The best loan officers are the ones that are proactive, not reactive. For example, if a borrower is not timely responding to the loan officer’s requests for documentation, a proactive loan officer will follow up with the borrower to ensure that information is submitted as soon as possible, rather than sit back and let two weeks slide by. Most importantly, the loan officer MUST be able to quickly communicate with the underwriter and closing department (no matter what city they are located in). When the loan officer cannot communicate effortlessly with the underwriter or closing department is when problems usually occur.
The Underwriting Department: These are the people who take all of the information your loan officer told you the lender would need to process the loan. Thus, if the loan officer is not on his or her game, the underwriter WILL need additional information. Great underwriters (like great closing attorneys) look at the file as soon as they get it and identify problems early in the process – they do not let a week or two go by before they even look at the information they are sent. THIS is the time during the loan process that things can really get off track. There is nothing more detrimental during the loan process than wasted time. Another critical aspect of the underwriting process is the timely ordering and review of the appraisal. Without an approved appraisal, the closing will not occur. Like most things regarding lending, the sooner the better. Once the underwriter has cleared the loan for “closing”, the file is sent to the closing department (this is where all the magic happens folks).
The Closing Department: The closing department has an extremely important role and performs so many critical tasks. As the closing attorney, however, I want one thing at this stage: The Closing Instructions! This information allows me to prepare a HUD (the document with all of the final numbers on it that EVERYONE is asking for as we get near the closing date). Once the HUD is approved by the lender, the closing package is released and we are ready to close. The biggest problem I have encountered at this stage is when the closing department is so busy that even though they have everything needed to send me the closing instructions (and make everyone HAPPY), they just can’t find the time until the last possible second. There is nothing better than getting the final HUD circulated to all of the parties three to four days before closing.
So what does all this mean? It really doesn’t matter if (1) the lender is a national, regional or local bank (or credit union), (2) it has 10,000 branches or one local office or (3) you actually know the loan officer personally or they were just a referral. Generally, the ONLY thing that matters (other than the rate of course) is that you feel CONFIDENT that your lender will seamlessly become a part of your TEAM (along with the realtor and the closing attorney) to effortlessly and expeditiously FINISH THE DRILL (sorry it’s football season I had to get in one Mark Richt reference for you Georgia fans).
Bottom line – pick a lender who you believe (or have heard) is proactive (not reactive), provides continuous updates throughout the closing process, and treats YOUR closing like it’s the ONLY one they have that month!
If you have any questions regarding this post or have any other questions regarding real estate closings, trusts and estates, probate and LLC formations please contact me at (912) 484-1996 or jgerber@brannenlaw.com