Every Real Estate Investor (REI) wants to close as soon as possible but unless you help the process along by doing the simple tasks required by your Hard Money Lender (HML) and the title company you are almost guaranteed to miss your closing date. A real estate transaction closing is quite simple and the better you understand it the more you can impact and even influence the closing itself. Letâ€™s start by looking at the four main parties to a real estate closing.
1.) The Buyer - You
2.) The Seller
3.) The Title Company â€“ Closer
4.) The Lender â€“ in this example a Hard Money lender (HML)
Each of these parties have varying degrees of influence on a typical closing.
The Buyer (you), has most of the responsibility for producing all of the required items needed to close a loan. The buyer also is 100% responsible if something bad happens. I know many of you think that the lender, seller or even the Title Co. can be at fault. If a closing does not happen it is the fault of the buyer. Why? Because as the buyer, you should be on-top of the transaction and be ready to step in and find a solution if a problem arises. The buyer is the ONLY party that has the motivation, access and responsibility to ensure that all problems are solved and that the transaction closes. Let me repeat thisâ€¦ The buyer is the ONLY party that has the motivation, access and responsibility to ensure that all problems are solved and that the transaction closes.
The Seller is simply along for the ride. Once they have the property under contract to sell their sole responsibility is to show up at closing, accept a back-up contract or to give you an extension if you do not close on time.
The Title Company â€“ Closer will be working closely with you and your lender to bring the transaction to a successful close. However it is important to remember that there are other transactions being closed at the same title company and by the same closer so it is the responsibility of the you the Buyer to ensure that the title company is moving every forward in a timely manner. Remember that a title companyâ€™s busiest time is from the 20th of the month to the end of the month. If you are trying to close your loan during this time period be aware that the title company may have problems finding a time to get you in to close. As long as you provide everything you are required to have by the lender into the title co in a timely manner your loan should close as scheduled on the contract. The lender will coordinate with the title company to close the transaction as required by the contract.
The Lender, in this example a Hard Money Lender, will drive the closing of your transaction and will work closely with you to get all of the items required to close the loan in a timely manner. It is important to note that ALL of the required items MUST be received by your lender as-soon-as-possible to ensure a smooth closing that happens on or before the closing date on the contract. Your lender will NOT close a loan until they have everything that you are required to provide. Most lenders require everything to be received by underwriting at least 72 hours prior to closing. Donâ€™t expect to deliver requested items to the lender on the day of closing or even the day before and still close as scheduled. A lender will not draw loan docs until they have a complete loan package. Docs take 24 to 48 hours to be drawn, approved and sent to the title company. The title company itself needs several hours to prepare a HUD-1 for the lender to approve prior to closing.
As mentioned in earlier in the article that you the Buyer have the greatest responsibility and influence in a typical transaction. If you get all the required items to the Lender and the Title Company in a time manner and stay on-top of the closing process you can almost guarantee a smooth closing every time. If you simply kick-back and wait for the transaction to close and plan on providing the required info when you â€œget around to itâ€ plan on having a lot of missed closings. A smooth transaction with a Hard Money Lender should take 2 weeks from application to closing. You decide what type of closing you want.