Strategies to Prevent Lender Delays When Closing on a Home
Buying a home is a significant milestone, but sometimes unexpected delays from lenders can make the process stressful. Here are some insights into common lender delays and how you can proactively address them to ensure a smoother closing. One of the keys is working with an escrow company that can keep the process moving.
Understanding the Source of Funds Verification
One common issue that can delay the closing process is the lender’s need to verify the source of the buyer’s funds. This includes money for the down payment, closing costs, and earnest money. Lenders do this to assess risk and ensure that the funds are legitimate and not additional undisclosed loans.
Be Prepared with Documentation: If you are the buyer, having the necessary documentation ready can prevent this delay. For example, if your down payment comes from an inheritance, have the legal documents ready that prove these funds are part of an inheritance. Similarly, if the money was a gift, obtain a letter from the donor confirming it’s a gift and not a loan, accompanied by a bank statement or canceled check.
Seller’s Recourse in Case of Delays
As a seller, delays caused by the lender can be frustrating, but there are several actions you can take:
Set Clear Expectations and Penalties: If the delay is due to the buyer not providing necessary documents on time, consider setting penalties for late documentation. This could include a daily fee for each day past the agreed closing date, which should be agreed upon in writing to be enforceable.
Issue a Notice to Perform: This legal tool compels the buyer to complete their obligations within 48 hours. It’s a stringent measure and carries the risk of canceling the sale if the buyer fails to comply, so it should be used judiciously.
Ensuring the Escrow Company Is Not a Bottleneck
The role of an escrow company in the home-buying process is crucial as they hold and regulate the payment of the funds required for closing. Choosing a reliable escrow company can prevent unnecessary delays.
Choose a Competent Escrow Service: An efficient escrow company understands the importance of having everything in order for a prompt closing. Before selecting an escrow service, research their reputation and efficiency to ensure they have a track record of successful and timely closings.
If you’re considering buying or selling a home and are concerned about potential lender or escrow delays, proactive communication and preparation are your best tools. Have all necessary documentation prepared, understand the rights and tools available to you as a seller, and select your escrow service carefully. If you need more information or want to start the escrow process, feel free to reach out to Neighborhood Escrow at 310-378-2456 for expert guidance and support.
