Potential Closing Snags and How to Avoid Them
Most people know that closing on a new home can be equally as exciting as it can be stressful. There are important steps to take for the process where things can go not as planned while the stakes are high. Here are some potential issues that can arise so you can try to avoid them in the first place.
Buyer Side Potential Issues
Job – It can potentially happen that you lose your job in the middle of the home buying process. If you can find a new job relatively soon then you might be able to get a cosigner to keep the deal together.
Credit – Your credit may have been perfect when you got pre-approved, but it could change later when you put a home under agreement. One of the reasons this could happen is if you take on additional larger debts like buying a new car. Avoid larger purchases during this time so you don’t have any problems.
Down Payment – Make sure you have this ready and easily accessible meaning that you have the money ready to easily transfer (and not in a place where it takes several days), and know the exact amount needed.
Closing Disclosure – You should receive this three days before the closing so make sure you review it and double check for anything that is incorrect. Alert your agent if there is one immediately.
Closing Costs – These are separate funds from your down payment, so make sure you have your closing costs ready and even add a little padding to the amount just in case. Your lender should provide you with a good faith estimate of what will be due.
Insurance – As soon as you have a contract on a home then start collecting some insurance quotes for it. That goes for both homeowner’s insurance as well as flood insurance depending on your location and if it is needed. This will give you ample time to shop around if necessary.
Seller Side Potential Issues
Title – There could be a problem if your title company finds any outstanding liens on the property. Your title will need to be free and clear of any issues or “clouds” so get a copy from your lender as soon as you can and review it thoroughly.
Final Walkthrough Issues – Homes should always be completely empty of the seller’s belongings at the walkthrough and everything that was supposed to remain with the home should still be there. If either of these things are not the case or if there is damage to the home then this could delay the closing unless an alternate arrangement is made.
Either Side Issues
Move Coordination – It should be common sense that a buyer would move in after closing and the seller would be out before. However, sometimes wires get crossed and one of these parties is misguided or a moving mishap takes place and causes issues. It might be a good idea to share plans to avoid this so all are on the same page.
Death – You can avoid this potential issue with the contract stating that the obligations go to the heirs in the event of death of one of the parties.
Cold Feet – It can happen that one party for whatever reasons decides to not buy or sell the home. If a buyer does this, most agreements are written where they will forfeit their deposit as a result. If a seller does this, they will need to return the buyer’s deposit. The buyer could potentially sue the seller, but it is unlikely that they would.
Natural Disasters – If any natural disasters happen and the home is severely damaged then most contracts will give buyers an out. If it is only a small amount of damage, appraisers may want to confirm that this damage is repaired so that buyers can proceed with the purchase as normally would have happened.