Don’t Watch Your Deal Turn into a Pumpkin at Midnight

Mortgages fail to close for many different reasons. Most deals that fail to close occur because of innocent mis-disclosure on the part of the clients – and this can vary depending on whether you are working on a purchase or refinance mortgage – but this can be prevented.

Just as Cinderella’s carriage turned into a pumpkin at midnight – so can your deal!

The question is, what is your time worth? On occasion we meet brokers who don’t feel that it is their responsibility to perform due diligence – instead this should be left to the lawyer. However, we think that is a very costly proposition. When things pop up on closing that stop a deal, weeks, if not months, of your time and money are wasted - not to mention the time and expense of the real estate lawyer and insurer.

If you measure the small time investment to perform additional due diligence at the application stage, identifying problem deals early on – that time you would have spent on those problem deals can be dedicated to landing good deals. Seems like a fairly obvious calculation, but it is one that many brokers have still not wrapped their heads around.

Just by validating property ownership, the approximate value and encumbrances, you can:

• Identify properties where there may not be enough equity to pay closing costs – the real estate sales professional may not know
• You may identify all current mortgages on title
• You can identify other people on title to the home
• You can identify homes that are being sold in close proximity to their purchases which can pose a problem with some insurers
• You can identify undisclosed non-arm’s length transactions which can prevent mortgage fraud
• You can estimate equity to ensure that the information stated in the application is accurate and more…

The challenges listed above represent many of the most common reasons that deals fail to close. If you want to prevent your deals from turning into pumpkins – that little bit of extra due diligence can not only help you avoid deals but also save deals before you get to the 11th hour. Learning about potential issues early on empowers you to find solutions – and after all, your client does count on you as their trusted advisor.

For more about the benefits of conducting due diligence at the very beginning, stopping bad deals before they even get off the ground, please contact Purview For Mortgage Brokers today by calling 1.855.787.8439.