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The US Mortgage Pre-Closing Process – A Complete Guide
Aritas Mortgage Solutions
July 7, 2023
Contents
Closing day has arrived. Your client is almost ready to become a homeowner. As a lender, you may want to conduct a pre-closing audit to ensure everything goes smoothly.
You could help your clients with a detailed pre-closing checklist that includes complete loan terms, appraisal documents along with all the other information that is required to efficiently close the mortgage loan process. We’ve curated a handy guide that will take you through the mortgage pre-closing process in the US and help you improve your customers’ experience.
Understanding Pre-Closing in Mortgage
Think of the pre-closing checklist as a rehearsal for what is to come. Having a checklist handy will help you anticipate the next steps in the process. For instance, once your client has bought the house, your immediate focus should be to guide them to purchase a homeowner’s insurance that commences only once they shift into the new home. Next, they should arrange a check for property down payment and other costs shared by the attorney.
Your client probably made an earnest money deposit during home purchase, so you need to ensure this sum isn’t included in the check. Subsequently, ask your client to revisit the property and make sure everything is in order.
Once you’ve covered these steps as part of the mortgage pre-closing audit, guide the buyer to move on to the closing process.
What is The Closing Process?
The closing process begins after you’ve approved the loan and the buyer has finalized the house.
Closing or Settlement is the final step in mortgage loan application process. In this step, the buyer and their real estate agent meet the seller, their agent and an escrow agent. All of them review documents in detail.
It will help both you and the buyer to be aware of the documents that are reviewed in the settlement meeting. These include the Mortgage Note, the Deed of Trust and the Closing Disclosure.
The Deed of Trust essentially confirms that the buyer understands the loan terms and promises to fully repay the loan amount. It also reiterates your right as a lender to foreclose the loan if the buyer fails to repay the loan amount.
The Closing Disclosure specifies changes (if any) in the mortgage loan plan or interest rates since the start of the application. It also confirms the actual purchase cost compared to the estimated amount.
At this stage, the homebuyer will need to sign declarations confirming that they understand their obligations and rights as a homeowner. The closing disclosure is also signed.
After reviewing everything, the property transfer begins. This procedure may vary across different states. You can check laws to ensure compliance.
Finally, the keys are handed over to the buyer.
What’s Your Role as a Lender?
As a lender, you must proactively review all the documents in detail on closing day to make sure there aren’t any gaps in your client’s deal. An empathetic lender will always address buyers’ doubts if a number on the agreement sounds inaccurate to them. You should be open to fixing any wrong projections rather than offering an implausible explanation.
Even though the process depends on a buyer’s credit rating, your focus should be to empower them with all necessary details and information, so they know what’s best for them. It is your responsibility to thoroughly explain the agreement to the buyer. Give buyers the space to reconsider their decision or walk out in case they are not comfortable at any point.
The mortgage pre-closing process is a vital part of loan processing. Hundreds of checks must be performed before successful loan closure.
How Outsourcing Mortgage Pre-Closing Support Services Can Help Lenders
Outsourcing the pre-closing process can help streamline operations, reduce turnaround time and save costs. Here are some advantages of outsourcing your operations to us.
Customer Insurance Management
Efficiently track loan applications for your customers. We also offer the right guidance to help them find the right insurance that protects them from unforeseen risks in addition to regular updates that will enhance customer experience.
Down Payment and Closing Costs
You don’t have to worry about handling the collection of the cashier’s check from the bank funding the mortgage loan transaction. Our pre-closing services include handling collections, meticulous calculate and include all additional closing costs associated with the loan. Through close collaboration with your attorney, the financial institution, and the client, we enhance the quality of your pre-closing service.
Payoff Statement Management
Thorough review of payoff statements ensure information contained within is accurate and reliable. We conduct all necessary checks and verifications before dispatching the payoff statement to customers. This includes verification of payment schedules, interest rates, loan amounts and remaining balances. To ensure transparency, we ensure that your customers have the most precise information about their mortgage loans.
Loan Disclosure Form Preparation
You get comprehensive loan disclosure forms that encapsulate all the final details of the mortgage loan. Following the guidelines set by the Consumer Financial Protection Bureau (CFPB), we stay up to date with the latest procedures associated with the closing disclosure form. Our pre-closing services pave the way for a smooth and efficient closing process. Check out the most common closing disclosure errors that lenders need to avoid.
Pre-Closing Audits
Regular audits ensure quality services and a thorough review includes essential loan documents such as customer information, appraisal reports and insurance documents. The documents are meticulously scanned for errors and mistakes to minimize the chances of legal repercussions throughout the loan’s lifecycle.
At Aritas Mortgage Solutions, we offer pre- and post-closing audits to simplify mortgage processing for you. Our team of seasoned professional can help you identify, manage and communicate pre-closing audit risks across the loan setup process. As a result, you can accelerate operations, increase efficiency, save time and maintain a healthy cashflow.
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