You’ve finally done it!
You scrapped and saved enough money for a deposit, searched countless homes looking for the one that’s perfect for you and your family, made an offer that was accepted and now you’re going to become the proud owner of your first home!
The closing date’s been set and you can hardly wait, but as soon as you get off the phone with your agent the questions begin to pester you, like tiny, irritating insects buzzing your head.
What if the financing falls through? Or the seller changes their mind?
When you understand the closing process, including how potential issues are resolved, you’ll be able to easily lay those pesky thoughts aside and get on with your day.
It’s unlikely that you’ll face any of the following home closing problems, but if something does creep up, you’ll know what to expect.
1. Title problems
A “clean title” can be defined as a property which has no liens, ownership issues or other encumbrances that will interfere with your ability to own and/or sell your property.
Most title problems are simply a result of human error such as a legal description that’s incomplete or missing, or the wrong street address on the contract. In some cases, a title insurance company will discover a loan that was never formally released or a previous owner who failed to release their interest in the property.
The nature of the title problem will determine how long it will take to fix the issue, but suffice it to say that most title problems can be easily fixed.
If this happens to you, don’t panic…chances are you won’t even discover it until it’s already been resolved.
2. Financing problems
Whether or not you obtained a pre-approval from your lender, sometimes financing issues can happen at the last minute, causing a delay in the closing.
For example, if a last-minute credit check and bank statement review by your lender show anything unusual it could mean more documentation will be required from you which the underwriter will then need to review.
3. Timing issues
The closing date agreed upon was unrealistic in terms of how long it would take for everything to be accomplished.
It generally takes anywhere from 45 to 60 days from the time an offer is accepted, however, some things can interfere with a timely closing, such as:
- ⬥ necessary repairs are needed and/or haven’t been done at all or have been done poorly
- ⬥ type of mortgage (e.g. FHA loans can take longer than other types of financing)
4. Appraisal issues
An appraisal can not only cause a delay in a home closing, but it can also potentially cause the sale to fall through.
Common issues with appraisals include:
- ⬥ The home appraises for much less than what the bank is willing to lend. If you don’t have the funds to pay the difference (or cannot qualify for a second mortgage to cover the shortfall) the sale can fall through.
- ⬥ The appraiser makes recommendations on issues that need to be resolved before the closing can take place (e.g. carbon monoxide detectors need to be installed…even smoke detector batteries with dead batteries can delay things)
5. Problems with the home
Repairs aren’t completed
Your lender will very likely require a walk-through before closing. If repairs that were agreed upon in the contract haven’t been completed that will trigger a delay in the closing.
Not only will you have to wait for the repairs to be finished, but they will also need to be inspected to ensure they satisfy requirements.
Home systems aren’t functioning
The final walk-through is your last chance to walk through the home before you take possession.
Your closing may be delayed if there are any issues with:
- ⬥ repairs that were (or weren’t) done
- ⬥ the home’s furnace and air conditioning
- ⬥ the appliances that were included in the home sale
- ⬥ utilities
- ⬥ toilets
If you don’t have these issues taken care of before the closing, any problems the seller have now become yours.
6. Paperwork delays
Types of paperwork problems that can cause delays include:
- ⬥ missing documents – someone either failed to ask for them or didn’t receive them
- ⬥ documents filled out incorrectly (typos, missing names and/or other information such as street address)
7. Seller backs out
The reasons why a seller might choose to back out of a purchase agreement include:
- ⬥ they got a better offer
- ⬥ they don’t want to make the required repairs or modifications
- ⬥ they’ve changed their minds about moving
If this happens to you, it’s possible you could recoup damages. Ask an attorney to get involved – if you don’t already have one – or if you’d rather just move on you can recover your earnest deposit and look for another home.
Finally, realize that there’s no “perfect” home closing.
There are a lot of moving parts that take place behind the scenes to make sure that the closing can go as smoothly as possible, but sometimes things happen. If they do, be patient…most issues can be resolved in less than a week, requiring little to no effort from you.
