Many first time homebuyers are unaware of the timelines and deadlines associated with purchasing a home. They understand the list in that there is a close date on their offer but as real estate professionals we must inform our clients that sometimes, these dates are flexible depending on a few different factors.
If there are delays in the checklist of items lenders, attorneys, inspectors, appraisers, buyer/seller documentation, then there can be a delay of the closing date in which we would request an extension.
On every offer submitted, we have a mortgage commitment date and a closing date.
The mortgage commitment date is the date by which the bank says YES, you have truly satisfied all requirements and we are granting you permission to purchase this home. In order to issue a commitment letter, banks need current information on the following items which all have expiration dates as well. Here are 4 items that are good for 90 days, after which you will need to supply new documentation:
- Income: Pay Stubs
- Assets: Checking, Savings, Investment, Retirement
- Credit: Must be re-pulled after 90 days but should not be re-pulled until needed (communicate with loan officer)
- Appraisal: Good for 120 days before a new appraisal is required
The timing on these documents can create issues.
If there is any change in employment status, let your loan officer know immediately. This is a MAJOR issue that will need to be addressed so you know what your options are moving forward.
Statements for your assets vary in terms of dissemination. A lot of real estate is about timing. Speak with your loan officer regarding the current statement for your investment and retirement funds. Checking and savings generally comes out monthly.
ALL loan approvals are at risk if the borrower ruins their credit, loses or quits their job or if they spend their down payment money. This is true whether their Commitment Letter is issued 3 weeks prior to the closing or 3 months. Essentially, we advise our clients not to change anything in their life until the transaction is complete. Do not make any major purchases to alter your credit (I have seen client’s credit score drop as a result of a purchase and the reduced score disqualified them from purchasing. thankfully, the seller was flexible and we were able to extend the dates but this is few and far between)
We hope you found this little tidbit helpful.