The Shift to a 45 Day Home Buying Process

Buying a home?  Want some advice that’ll save you a ton of stress and make the home buying process more enjoyable?  Make your contract date longer than 45 days.  Your agent doesn’t think that’s possible?  Send them this blog : )

The mortgage industry is currently in the middle of a business boom due to a rare alignment of drastically lowering rates and a large amount of available home equity for borrowers everywhere.  Due to the lowering rates, home owners are choosing to refinance in droves (Housing Wire recently posted that nearly 10 MILLION home owners can reduce their rate by .75 or more!), and the increased applications have lender’s operations staffs working overtime.  With an influx of applications comes longer turn times for things like reviewing conditions, sending and reviewing disclosures, underwriting, and moving a loan through the closing process.

A 45 day contract period will assure a stress free transaction and allow some breathing room for market-driven delays

As lenders get busier, the 3rd party vendors they rely on also see an increase in business.  Appraisers have more homes to appraise and reports to write.  Title companies have more title searches to run, closing to attend to, and issues to resolve.  This ripple effect doesn’t cause an extreme delay on any front, but an additional day here, day there, and before long, the entire process is a week longer.

For now, loans can still close faster than 40 days.  In many cases, they’re closing faster than 30 days and in as little as 2 weeks, but as applications continue to come in, hiring can’t happen fast enough (remember, with hiring comes training, which means a new hire moves slower AND a more experienced team member training them gets less done as well!), so turn times WILL increase, and if you’re operating under a 30 day contract, there is 0 room for error.

Listing agents need to communicate this with their sellers, and buyers agents need to be aware so they don’t create an unnecessary hurdle that could add stress to their client’s home buying process.  Verbiage that’s often included in purchase contracts includes language such as “45 days or sooner if all parties agree…” to allow a transaction a full 45 days to consummate – but leaves room to close early if the pieces fall into place.

Can a transaction still take place in under 30 days if it’s needed?  It can.  But agents should work to exceed client expectations and limit stress for their clientele throughout the home buying transaction, and setting an escrow period of 45 days is an easy way to make life easier for everyone, and avoid unnecessary (and extremely stressful) delays.