April 11, 2013
When FHA loan applicants work on getting a mortgage and closing the deal, sometimes things don’t always go as smoothly or as quickly as planned. In cases where there is a delay for some reason, do FHA loan rules include built-in time limits on how long a borrower and seller can go between loan approval and closing?
While a casual glance at the FHA loan rules may not turn up a specific rule which says “FHA loans must be closed in X number of days” there are several requirements that add up to the need to get an FHA loan accomplished in a timely manner.
One is the length of your interest rate lock-in period–once it expires you and the lender may need to renegotiate the rate, so it’s in the borrower’s interest to get the loan closed as soon as possible within the rate lock time frame you and your lender agreed upon. (This rate lock period may vary from lender to lender.)
Another requirement that adds up to an informal “timeliness requirement” is found in HUD 4155.1 Chapter One Section B: “Lenders must obtain the most recent documents required to perform the mortgage credit analysis. ‘Most recent’ refers to the most recent document available at the time the loan application is made. See HUD 4155.1 1.B.1.h for the maximum allowable age of documents.”
In other words, your most recent credit report, pay stubs, tax information, etc. are required to be on file in order to get the application approved. But that’s not all–the same rulebook also says, “At loan closing, all documents in the mortgage loan application may be up to 120 days old, or 180 days old for new construction, unless
• a different time frame is specified in this handbook or in other applicable HUD instructions, or
• the nature of the documents is such that their validity for underwriting purposes is not affected by the prescribed time frame, such as divorce decrees, or tax returns.
If the age of documents exceeds the above limits, the lender must obtain updated written verification of the documentation.”
If your lender needs more current information from you based on a delay in the loan closing, you will be notified, but anticipate needed new or updated paperwork depending on how long your loan is delayed, where applicable.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: