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How NOT to Let Great Rates Hold Up Your Closing

Eric Trailer, Mortgage Banker, Absolute Mortgage Banking

January 22nd, 2008 · No Comments

I recently read a great post from Dan Green, a mortgage planner in Ohio, titled, “While Rates Are Low, Schedule Your Purchase Closing At Least 45 Days Out “, and I wanted to remind any potential home buyers searching within or around Palo Alto, CA that local sellers are still requiring a 30-day or less close. Thanks to our main man, Dr. Boer, for bringing this blog to my attention.

Dan does have some great points about turn times deteriorating, underwriters being more cautious and resources being slimmer. All of these concerns are valid and may press the close date on any transaction. Thus, it’s important to verify with whomever you select as your lender what the timetable looks like for your situation. As a general rule, purchase transactions are given higher priority than refinance transactions.

The reality is that we have worked on two transactions already this month where the close date was ten days or less from contract ratification. In fact, one call I received yesterday asked whether a month-end close would be possible for a client looking to buy a condo in Menlo Park. Yes, a one-week close is possible.

So how can you prepare, and whom can you trust to get your transaction done right and on time? I offer the following:

1. if you have a trusted mortgage lending source, double check to determine whether the institution makes direct lending decisions (usually a direct lender or a mortgage bank)

2. if your trusted source does not make direct decisions (usually a mortgage broker), request a realistic timetable to determine whether your loan will fund in the time required by the contract

3. ask your real estate professional for a referral to a lender that she or he trusts

No doubt, this is a fantastic time to be buying a home: there a some local values out there, rates are phenomenally low (have you seen that 5-year treasury lately, wow! And what a move by the Fed to lower another .75%..!) and our local economy is doing well (check out Iverson’s latest post for more on that subject). The flip side is that the inventory of available homes has not been very encouraging (only four new ones in Palo Alto on Friday– ouch).

My position has always been that you can’t go wrong with purchasing real estate in select areas of the peninsula, provided that your holding period is five years. And if you’re someone with a reliable real estate professional, a reliable lender, reasonable qualifications and a solid plan, you will likely see a nice bump to your net worth over the next five years by making a move sooner than later.

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