13 Potential Closing Disasters and How to Avoid Them
Closing on a new home can be just as exciting as it can be stressful. There are many steps to take along the way where things can go not as planned while the stakes are high. Here are some scenarios that can arise so you can try to avoid them in the first place.
Buyer Side Potential Issues
Credit – While your credit may have been stellar when you got pre-approved, it might change later on when you put a home under contract. One of the biggest reasons this could happen is if you take on additional debts like buying a new car. Avoid larger purchases during this time to avoid any issues.
Job – It can happen, you could lose your job during the home buying process. If you can locate a new job quickly then you may even be able to get a cosigner to secure the deal.
Closing Disclosure – With recent law changes you should receive this 3 days before closing. Make sure you review it and check for anything out of order. Alert your agent if there is immediately.
Loan Document Issues – You will get these docs 3 days before closing so again, make sure you review for anything that is even misspelled. It is not uncommon to see names misspelled which can be a closing delay so double or triple check everything!
Down Payment – Make sure you have this ready. That means make sure you have the funds ready to transfer (and not in a place where it takes several days), and know the exact amount needed.
Closing Costs – Different than your down payment, make sure you have your closing costs ready and even add a little padding to the amount just in case.
Insurance – As soon as you have a contract on a home, call and get some insurance quotes. That goes for both homeowner’s insurance as well as flood insurance. This will give you time to shop around if need be.
Seller Side Potential Issues
Title – There could be a delay if your title company finds any liens on the home. Your title will need to be free and clear of any issues or “clouds” so get a copy from your lender asap and review it thoroughly.
Walk through Issues – Homes should always be 100% empty of the seller’s belongings at the walk through and everything that was supposed to stay with the home should still be there. If either of these are not the case or if there are any damages then this could delay things unless an alternate arrangement is made.
Either Side Issues
Move Coordination – You would think this is obvious that a buyer should move in after closing and the seller should be out before. Sometimes wires get crossed and either one of these parties is misguided or a moving snafu takes place making for issues.
Death – You can deal with this potential problem with the contract stipulating that the obligations go to the heirs in the event of death.
Cold Feet – It can happen, someone for whatever reasons decides to not buy or sell the home. If a buyer does this, most contracts are written where they will forfeit their deposit. If a seller does this, they will need to return the buyer’s deposit. The buyer could potentially sue, but it is unlikely that they would.
Natural Disasters – Should any disasters happen and the home is significantly damaged then most contracts will give buyers an out. If it is a small amount of damage, appraisers may want to review that this damage is fixed so that buyers may proceed with the purchase as normally would have occurred.