Getting a home mortgage seems simple enough. You find the best rate and terms, fill out a long application with information about your debts and income, and wait for approval. But these days, banks and mortgage companies are swamped with applications from home buyers and from people who want to refinance their old, high-interest loans for new, lower ones.
For many lenders and borrowers, this heavy volume has caused a lot of delays. If you don't keep a close watch on your lender, you may not get your loan on time, or the commitment on your mortgage rate might expire.
A delay could mean losing an interest rate commitment that has been locked in for 60 days. While rates have slid some since the most recent cut in the discount rate by the Federal Reserve, there's no guarantee they'll be as low in 60 days.
A delay can also mean losing your house. If you don't get your loan in time, the sellers may be free to accept a better offer.
But there are ways to avoid delays and push your mortgage through. You may have to be a bit of a pest, but it will be worth it in the end.
I recently went through this. My wife and I just moved into another house, approximately three months after putting our old house on the market. Normally, it's up to every borrower to keep an eye on the progress of his loan, but because the couple buying our house had to be out of town during the crucial weeks of the loan process, it was up to me to stay in contact with their bank.
Fortunately, I had no problem with the lender handling my new home purchase, so I could turn my full attention to our buyer's bank.
As it tunred out, that attention was very necessary.
First, there was the problem of the buyer's job. Although the husband had been hired, he hadn't started work yet. When the company received the employment verification form from the bank, somebody in the personnel department looked at it and sent it back with a note saying he never heard of the guy. After I called the company, the personnel manager checked all departments in the firm and filled out another verification
Then there was the appraisal. The buyer's bank, like many others, hired an outside firm to appraise the value of our house. When the appraiser finished his report, he dropped it off at a branch of the bank near his home. Somehow, the bank's inter-office mail system lost it.
I didn't learn it was missing until the underwriter who was processing the loan at the bank said he should have had the appraisal by then. After several calls, I was able to reach the appraiser and get him to send another copy.
Appraisal problems have become more frequent as the backlog of applications for new mortgages and refinancings hits the appraisal business. While some banks can add clerical help to ease the mortgage-application crunch, there are only so many trained appraisers around, and they have been pushed to the limit.
I also had to supply another copy of the plot plan, because the bank lost the first one which the buyer turned in with his application.
Also, because of the delay at the bank, it looked as if the bank's attorney wouldn't be able to start working on his part of the job in time to apply for a lien certificate. This document states there aren't any outstanding tax bills or other unpaid debts to the city, or any claims by private individuals, such as a contractor who didn't get paid. Since it takes two weeks to get this certificate in this area, I got it myself to have it in time for the closing.
If you're selling your house through a real estate agent, a good agent should do much of this work for you. That's one way they earn their commission. But you should check with the agent every week or so to see if any documents are missing and if any more information is needed. Even then, it's a good idea to keep in touch with the bank yourself to make sure no small but important details delay the loan.
You can avoid some of these problems by asking around before applying for a mortgage. Real estate agents have to be careful about openly criticizing specific banks and mortgage companies, but they can tell you which ones have given them the fewest problems.
And don't assume that a bank can handle mortgages efficiently just because it does a good job with your checking and savings accounts; the two lines of business are very different and some banks have not beefed up their mortgage departments enough to meet the crunch.
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