Issues That Can Jeopardize Closing On Your New Home
When kids dream about owning their own home one day, they think about independence, nobody telling them what to do and the freedom to do what they want. If homeownership were only that simple! There’s a lot of work that goes into a home and the seriousness of homeownership will penetrate a rookie as soon as they initiate their first house hunt. The process of buying a home is enough to drive anybody over the edge; from hiring a realtor to finding a home you like, get approved for a mortgage, negotiating, inspections, appraisals and finally when it’s done, if you haven’t made any mistakes along the way, closing.
Once you’ve made it to closing, that’s when most breath a sigh of relief, the process is finally over. After negotiating a favorable deal, agreeing to terms and beating out other bidders, it’s natural to feel like you’re on top of the world and imminently taking possession of your dream house. However, the closing process is anything but smooth. Firstly, there’s no way of predicting how long exactly it will take, even if everything goes well. The odds of it going perfectly smooth are slim, given all the steps. Here are common things that can significantly stall your closing or kill it all together:
1) Appraisal Comes In Low
Before even shopping for a home, it’s vital to get pre-approved for a mortgage so that you know where you stand and can move quickly in a time sensitive negotiation. Being pre-approved, however, doesn’t guarantee you that mortgage; all lenders require an appraisal of the property to ensure they are not investing in something that is overvalued. If the appraisal comes in below the asking price, the mortgage will not be approved. In order to keep the deal from being killed, the seller will have to be willing to negotiate a lower price. The best case scenario is your closing process gets delayed.
2) Big Purchases
When closing in on your home, it’s natural to make big purchases, like expensive furniture. Also, it can take months from being pre-approved to actually finding a home, a lot can happen; new car, expensive work equipment and several other possibilities. Making big purchases can change the status of your approval. When a lender pre-approves you for a mortgage, they look at every financial detail. An unaccounted big purchase can drastically change their assessment. In order to ensure the status of your loan stays consistent, avoid any big purchases until after closing.
3) Coordinating All The Parties
In order to close, you require all the following parties present on closing day; the attorney, title company rep, buyer, seller, lender and closing agent. That’s a lot of people to get committed on the same day. Often one or more of the parties will cancel and reschedule. Until you’re able to get everyone on the same page, your closing will keep getting delayed.
4) Title Issues
There are many title issues that can arise that would delay or kibosh the deal. These include; errors in the public record, forgeries, boundary disputes, illegal deeds, missing heirs, liens and on and on. You can protect yourself by purchasing title insurance, but these types of issues can delay the process to varying degrees.
For more buying tips, don’t miss Why Researching the Neighborhood Matters.