When you’re selling your house, you’re probably wondering what happens on closing day for sellers, but lots of our sellers are also questioning what is happening to the buyers. Because if the buyers can’t get loan approval, then there is no closing for the seller. In this blog, we will show what is happening to the buyers when they are getting close to closing week and the problems that can occur during that week.
Final Underwriting Approval (Borrower)
The underwriter makes sure all documents from the borrower are accurate and complete. This can include income verification. Borrowers who have multiple jobs, like the case with some of the sellers we represent, may require more time and paperwork to move things along. Additionally, borrowers who work for tips or bonuses can be processed, but it often takes more work.
The borrower’s credit score will be checked once more to make sure it hasn’t changed since the pre-approval stage. The lender wants to ensure the borrower hasn’t made large purchases or obtained any large loans since the first credit check.
Another big issue that comes up is borrowers making large deposits in such a short period of time. The underwriter will have to know where these funds came from and if they are in compliance with lending standards.
The underwriter reviews the appraisal that was done for the property, ensuring that the property is a good investment for the bank and aligns with the bank’s standards.
What Can Happen After the Initial Review?
Clear to Close: This means the lender has no other conditions for the borrowers, and they can proceed to closing.
Additional Information: Like we mentioned above, if a borrower has multiple jobs and the underwriter needs verification, this will be a condition that they will require, and oftentimes this can drag out the closing date for you as the seller and delay closing. The most recent closing we had at the end of the year, especially with the holidays, HR was on vacation, and it took time to verify the second job. The closing date had to be extended for us to close.
Denial: In some cases, a borrower’s situation can change. Their income might change, or they might experience a loss of a job. Or the lender issued a soft preapproval, and we wait until the last week of closing and find out they hadn’t been at their current job long enough to qualify; it might seem simple, but it does happen.
What You Should Know As a Seller?
Delayed closing can be frustrating when so many things are happening and the borrower keeps delaying closing. Just know this: the lender, underwriter, and buyers and listing agents want to close on the house as much as you do. Everyone’s goal is to make sure everything is in compliance so that they can close as soon as possible.
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Seller’s Role
The seller’s duty is to sign the deed to transfer the ownership of the property to the buyer.
They sign the Settlement Statement, which shows the debits and credits of all the fees of the transaction and the money you are receiving.
Sellers are typically responsible for some closing costs, which may include:
- Real estate agent commissions
- Prorated property taxes
- HOA fees (if applicable)
- Excise Tax
You’re going to see how much you are going to receive in net proceeds from the sale after paying off your mortgage. After, you’ll set up wiring for the funds to be deposited in your account.
Learn more about Costs to Sell a House
