What happens if underwriting delays our closing?
Usually the closing date moves, and the deal and your deposit stay intact. The date that protects your deposit is the mortgage commitment date in your purchase and sale agreement, which usually comes weeks before closing. You protect it with a written extension or written notice before it passes.
The other two dates to watch are the lender’s lock on your rate and your Closing Disclosure, which you have to receive three business days before closing.
Most delays are the lender asking for one more document, or an appraisal that came back late. The trouble starts when everyone watches the closing date and nobody watches the three dates that decide what a delay costs.
What Happens When Underwriting Takes Longer?
The lender’s underwriter works through a list of conditions before signing off. Some are about you, like your income, your savings and the appraisal. Others are routine closing items, like clear title. Each one is the lender’s call, because a broker places the loan and the lender underwrites it.
You’ll hear that if the closing date passes, the deal is off. It usually isn’t. Closing dates move all the time, by a short written extension both sides sign. Speed helps most. Answer each request the day it arrives, and send every page of every statement, even the ones marked intentionally left blank. If the delay runs into weeks, expect to send fresh pay stubs and statements. For most conventional loans, those can’t be more than four months old at closing.
Which Dates Matter When the Closing Slips?
The date on your calendar is the closing date. The date that protects your deposit usually comes weeks earlier, under a different name. Buyers who say “if underwriting runs late, we lose our deposit” have the right fear and the wrong date. Letting the commitment date pass in silence is what puts the deposit at risk.
- Mortgage commitment date. Under the standard Massachusetts form, if the lender hasn’t committed by this date, you can end the deal and get your deposit back, but only by written notice before it passes. Otherwise your attorney asks for a written extension, which the seller doesn’t have to grant. A Massachusetts appeals court said a buyer who does neither “runs the risk of losing his deposit.”
- Lock expiration. Locks commonly run 30, 45 or 60 days. The CFPB says you might have to pay to extend one even when the lender’s processing time caused the delay. Ask about the lender’s extension policy early.
- Closing Disclosure. You have to receive it three business days before closing, and Saturdays count. A new closing date doesn’t restart that wait. Only three changes do: an APR change past the allowed tolerance, a different loan product, or an added prepayment penalty.
The last two can chain together. An expired lock can bring a new rate, and a big enough rate change moves the APR and restarts the three days. Your real estate attorney handles the contract dates.
What If Our Lease Ends Before We Close?
Ask your landlord now, not the week you’re due out. In Massachusetts a month-to-month arrangement is a tenancy at will, and a spoken agreement counts, but put it in writing anyway. It cuts both ways. Under state law you’ll owe written notice when you leave, generally 30 days or one rent period, whichever is longer. Staying on without permission isn’t a plan. Your landlord would have to take you to court, and that’s an eviction case on your record. If you’re still setting dates, plan a small overlap between the lease and the closing.
GoldCoast is a broker, so the lender underwrites your file, issues the commitment and locks your rate. What we can do is watch all three dates at once and tell you which one is about to pass. A pre-qualification is free and commits you to nothing.