6 Months+ To Settlement

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March 30, 2016 by Jeff Lowen

Once upon a time, all you had to bring 20% to the table and your lender would take care of the rest (Ok, it wasn’t really that easy), but it was a relatively streamlined process. Of course, there was a time we thought air travel was science fiction, too! ūüėČ

Now, with the¬†recent (As of October, 2015) Truth In Lending Act guidelines, we’re starting to see the effect it has on the market.

The TILA-RESPA Integrated Disclosure (“TRID”) rule is intended to improve the way consumers receive information about mortgage loans, both when they apply and when they are getting ready to close.

The rule requires lender to provide borrowers with two new, simpler disclosure forms: the Loan Estimate, which is delivered to the consumer within three business days after application, and the Closing Disclosure, which is received by the consumer at least three business days prior to signing the loan documents.

As a result, you can see with data complied by Ellie Mae, the time it is taking to sell a home is getting longer:

Slide0313-1024x768

If you’re selling a home

This is the time frame you’ll need to add¬†to¬†the “DOM” or Days on the Market indicator for your particular neighborhood. For example: In the DC Metro¬†area – The average days on the market, or “DOM,” is currently 91 days. That’s the time from when you stab a sign in the yard and tell the world my home’s for sale – to the time you get an offer and agree to all its terms.

Now, you add the closing process time from the above image. Another 50 days. So, let’s hope everything goes as planned, no mistakes, hold-ups, extensions or other things that often challenge a real estate transaction, you have nearly five¬†months before you’ll be able to walk away, cash out, get your check and move on. That’s five¬†months of taxes, mortgage payments, interest, maintenance, utilities and other incidentals your agent should discuss with you. Five months of planning. But wait! There’s more…

This isn’t meant to scare you, just to help you plan. I often hear people say they want to wait to put their homes on the market, and if you’re like everyone else, it will take you at least a couple of weeks to get your home ready. Unless of course you want sub-par offers (That depends on the market, too). And viola! We are up to 6 months!

The moral of the story…

Sooner is better to speak with a professional especially if you think you’re not ready. If you want recommendations, just ask me. With the average time it takes from the time you sign a listing agreement to cashing out and handing over the keys taking 6 months or more, you’ll want to make sure you have everything in place so there are no surprises!

If you want to move when the kids are out of school, you better call a professional NOW!

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