A Guide to Potential Lender’s Delays and How You Can Avoid Them
No matter if you are the most qualified buyer there ever was, there can still be hold-ups on the lender side that prevent you from closing escrow on time. This can be aggravating for all involved but there are a few things you can do to prevent them. Most notably, know what can hold up the process and be ready for those obstacles.
A Common Issue: The Lender is Determining the Source of the Funds
In some cases, a lender may insist on verifying where the borrower got the funds for the down payment, closing costs, and earnest money. If the buyer cannot show an easy and obvious paper trail that shows where the money came from, then the lender may feel as though their risk is higher and the loan can be delayed.
If you are the buyer, make sure that you have the paperwork on hand to show where the down payment came from. If it was through an inheritance, ask the attorney who handled the estate for a document showing that it was via inheritance. If a family member gave it to you as a gift, ask for a canceled check from said family member along with assurance that it was a gift and not a loan. Be ready for this potential slow down.
The Seller Has Rights When a Lender is Delaying Closing
If you are selling a home you may get understandably frustrated if the lender is delaying the transaction. The good news is that you can do more than feel aggravated – you have rights. If the buyer is simply dragging their feet in providing the necessary documents, ask how long they need. Then create a penalty to get the documents more quickly.
For example, you can enforce a fee for each day the sale goes past the day you agreed to close. You will need to get agreement to this in writing. You can also issue a notice to perform, but this can be difficult. Essentially, it gives the buyer just 48 hours to complete the request and if they do not, then the sale can be canceled. As you can see, there is plenty of risk in this option.
Do Not Let an Escrow Company Be the Reason for the Holdup
At Neighborhood Escrow we take our jobs seriously and we know how to get our ducks in a row to assure we are not holding up the closing process. If you have questions about escrow, need to open escrow, or otherwise want to speak with us, you can do so by calling 310-378-2456.
