What effect does an increase in the annual percentage rate (APR) prior to closing typically have on the closing process?

An increase in the annual percentage rate (APR) prior to closing typically necessitates an extended closing period due to the need for additional requirements and adjustments that come with changes in financing terms. When the APR rises, it often affects the overall cost of the loan, which can lead to increased scrutiny from lenders and require borrowers to reassess their financial situations and be more informed about their options.

Lenders may also be required to provide new disclosures to the borrower, which can extend the time needed for both parties to review and finalize documents. This additional time ensures that all aspects of the loan are clear and legally compliant. Consequently, the closing process becomes more complex and may require further negotiations, thus leading to a lengthened timeline to complete the transaction.

In contrast, options indicating that it could shorten the closing process or have no impact do not account for the regulatory and procedural requirements that arise with changes in financing terms, especially with a rising interest rate. Additionally, while additional documentation might be required, this is often part of the broader impact that leads to the need for an extended closing period, making it less likely to describe the primary effect.