Tips For a Fast Escrow

With the prevalence of short sales and bank owned properties in the real estate market these days, it behooves buyers to become a little more savvy about how to work within the system to close a deal faster and with fewer hassles for these types of sales. Following are some tips to get your bank owned or short sale deal closed faster. Short sales are admittedly harder, but if you follow these pieces of advice, you're likely to fare better than if you don't.

Don't just get pre-qualified

Many buyers don't know the difference between getting pre-approved and pre-qualified for a home loan. Too many agents are just happy to have a warm body to show a house to, and don't even think to advise their clients on this.

Being pre-qualified for a home loan is sort of like getting those mass mailed postcards telling you you're "pre-qualified" for a credit card. It simply means that, on the surface, you're credit history and unverified income appear to qualify you for the loan, but the bank hasn't necessarily seen all of your backup docs, tax returns, etc. Pre-approval generally means the bank has all the documentation and is ready to actually give you the loan. They just need an acceptable property for collateral.

Keep your financial docs handy

Having all of your docs packaged up once for the bank to give you a pre-approval is not enough. Every month, when new new bank and credit card statements come out, you'll want to update your docs with the latest information. This is because your bank will want to check everything over one more time before actually closing. Having your paperwork in order and at the ready will make things go ever-so-smoothly.

Get your loan from the bank selling the property

This is not always possible if you're going to get pre-approved before you even start looking for a home. But if you know you want to make an offer on a particular property, especially if it's a short sale, anecdotal evidence suggest that you may have better luck getting the bank who has to sign off on the sale to say "yes" if you are taking out your loan with them. They may be writing down a bad loan the first time around, but if they get the deal with your loan, they are more likely to agree to the deal.

Make sure your agent knows your desire to close escrow fast

Agents sometimes just assume that buyers are going in for a standard 45 to 60 day closing. If you are willing and able to close fast, make sure your agent is on the same page. During negotiations, it can quickly be determined if the sellers is amenable to a short closing period, sometimes as fast as two weeks if loan docs are ready to go.

Don't make big purchase on credit after you're approved

Don't even think of making any major credit purchase, especially by opening new lines of credit, once you've been preapproved. That will just raise questions and potentially impact your loan approval, causing serious delays. If your approval is already tight on the debt to income ratio, it could completely derail your loan.

Sell the home you live in now before buying the next one

It can be extremely inconvenient to sell your home before buying a new one, because you'll likely have to rent a house or apartment during the interim. Nevertheless, it is highly advisable for a number of reasons. First, if you have enough equity, it may enable you to make an all cash offer. I know, that's not likely; but it's possible you're in that category. Second, you won't have any contingencies to tie up the new deal. It just makes for a clean offer, so if you can pull it off, do it.

Make a cash offer

This is hard for most people to do, because we've become accustomed to going into debt for everything. Nevertheless, average people with average incomes are increasingly paying off their mortgages in full through financial discipline and hard work. You don't have to be wealthy to aspire to and actually become debt free in a short amount of time and pay cash for a house.

The bottom line is that fast closings can and do happen in many circumstances. Knowing a few tricks of the trade to can help your deal be one of them.