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Equity Now In The News - 2005

Sunday, July 24, 2005

Managing Your Fortune
Many factors affect mortgage closing speed
By Gail Liberman

Fast mortgage approvals may be slower than you think.

Don't confuse fast preapprovals with fast closings.

Preapproval means that a lender has pulled your credit report and qualifies you for the mortgage, subject to verifications. That frequently can be done immediately. The lender will issue a preapproval confirmation letter, which can make your bid on a mansion seem a lot more attractive to a seller. But you still need an appraisal and title report. That, experts say, often is where hang-ups lie.

"There's another level of preapproval," explains Michael Moskowitz, president of Equity Now, a New York-based mortgage banker. "You send in your pay stubs and (IRS form) W-2." With this added substantiation, he says he has been able to close a loan in as little as two days.

So what can you do to speed up your closing?

Your deal is apt to close faster if you're refinancing rather than purchasing a new home. Reason: You needn't worry about getting a buyer, seller and real estate agent together at one table. Larger loans - say, more than $1.5 million - may slow the closing process because they typically require more documentation and at least one other appraisal. Also, you may get faster service if a lender is keeping the loan rather than selling it off into the secondary market. Plus, expect faster service from a lender who keeps appraisers on staff. In that case, a lender has more control over the whole process.

EverBank, a Jacksonville thrift, is offering to pay $300 if it fails to get closing documents to your home within 12 days after it approves an online application. But the offer is only available for its "QuickClose Home Equity Line."

Because the lender holds onto its home equity lines rather than selling them to the secondary market, it has more discretion, explains John Surface, senior vice president. It needn't bother to meet added requirements of investors, as it does for mortgages. Moskowitz's mortgage banking company, licensed in seven states, has been running commercials saying it will close in five days. However, speed, he acknowledges, largely is a figment of how quickly a lender can get an appraiser and title report. It also depends on getting the buyer and seller together.

Moskowitz says his staff of 45 people can handle preapprovals. Although the appraisers he uses don't work for his company, his company provides 90 percent of their work, "so we have leverage to get them out." But he admits that as his company continues a planned expansion to more than 26 states, he may not always be able to operate as quickly.

Lenders often blame real-estate appraisers for slow closings.

However, real estate appraiser Dave Hohman, owner of Dave Hohman Associates Inc., Winter Haven, says the problem lies in the fact that the lender often orders the appraisal last.

The appraisal fee, which can range from about $200 to $500, he says, must be paid regardless of whether the deal closes. So lenders often don't order it until they're sure the borrower qualifies. Borrowers, he suggests, could have a faster closing by getting preapproved for a mortgage.

Appraisals are getting faster, Hohman says, because they're now computerized. Nevertheless, appraisers still must make an appointment to inspect a property. So figure at least an added three to four days from the time an appraisal is ordered.

To close on a property, it is important to keep tabs on your lender and its various vendors to make certain appraisals, surveys, title work and inspections proceed on schedule.

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