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Lender Will Make Your First Mortgage Payment If You Don’t Close on Time


A mortgage lender out of Edina, Minnesota is offering to make your first mortgage payment if it is unable to close your purchase loan on time.

The new “On Time Closing Guarantee” from Marketplace Home Mortgage will compensate the home buyer with up to $1,500 to cover their first mortgage payment if the mortgage isn’t closed on or before the closing date.

Additionally, the home seller will be eligible to receive $5,000 if the loan doesn’t close on schedule.

Of course, there are a ton of terms and conditions that must be met to ensure you get the up to $1,500 if for some reason the loan doesn’t close on time.

They basically want you to be a stellar mortgage borrower to keep the process running smoothly and to avoid delays.

That means you need to get them a purchase contract with a closing date no less than 30 days out by the time Marketplace Home Mortgage receives it.

You also need to get all conditions in at least eight business days prior to your closing date and once the loan is locked, no changes to loan term or loan type may occur.

And obviously if it’s not their fault, but rather the fault of the seller or you, the guarantee will be void.

The guarantee also excludes a number of loan types, including USDA loans, brokered loan transactions, short sales, refinances, jumbo loans, and various others.

In other words, the loan should be straightforward and easy to close, though even the most vanilla of loans can get tripped up every once in a while.

Paying for Peace of Mind?

Marketplace Home Mortgage isn’t necessarily the first lender to offer a closing guarantee, but they might be the only one to offer to make your first mortgage payment and give the seller $5,000.

That’s pretty impressive, but similar to Wells Fargo’s Closing Guarantee (which I don’t think they offer any longer) or the “Close on time guarantee” from the now defunct Discover Home Loans, it should be an afterthought.

While it’s nice to have a guarantee if things go wrong, it wouldn’t be the first thing I’d look at (or even the fifth) when comparing mortgage lenders.

If after I found a lender I liked and they had some sort of guarantee that’d just be icing on the cake.

But with so many rules and exclusions and a low likelihood of actually cashing in on the guarantee, there’s not much reason to focus on whether a lender does or does not offer such a guarantee.

At the end of the day you want a lender that can offer you a low interest rate, reasonable fees, good customer service, and ultimately close your loan without delay, especially when it’s a purchase transaction.

The problem with these guarantees is that you never actually want to collect on them because it will have meant something went terribly wrong. So it’s kind of a catch-22.

(photo: Cam Evans)

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