Once a seller accepts your bid and you know you have financing secured, you probably think you are in the clear. While this may be the case, there are often surprises that occur at the home closing, giving you more obstacles to jump. Rather than letting this happen to you, learn about the most common issues borrowers face so that you can sidestep them yourself.
Your Credit Score Changed
Be prepared for your lender to pull your credit again at the closing. Even though they already pulled it and approved you for a loan, they’ll do one final check. If you opened a new credit line or paid a bill late after the last credit pull, the lender will know about it. This could mean a change in your loan approval terms. In other words, it could mean that you lose your loan approval or at the very least, have a delay in closing.
You can prevent this from happening by keeping everything status quo. Don’t apply for new credit. Don’t use your current credit cards and pay your bills on time.
You Can’t Get Your Funds
Even if you have plenty of money in your bank account to cover the down payment and closing costs, an issue could still arise with the money. Long before the closing check with your lender and/or closing agent to see how they require the funds. They may want a cashier’s check, certified check, or a wire transfer.
No matter the form of payment they want, you will have to prepare. If you need a check from the bank, you’ll need to visit the bank during business hours a day or two before the closing. Don’t wait until the closing day to take care of this. If the agent requires wired funds, you will need plenty of lead-time to make this happen. Be clear to the bank when the funds need to arrive and ask about any issues that may occur that could prevent the funds from arriving on time.
The Title Isn’t Clear
You should know about any title issues long before you get to the closing table, but surprises can happen. It’s important to keep an open line of communication with the lender and even the title company. Find out what issues the title company found, if any. If there are issues, you’ll need to know the steps to fix them.
Usually, it’s an issue on the seller’s end. If it’s something you can’t control, stay in contact with the title company to see what progress has been made on the issue. Sometimes it’s something as simple as unpaid HOA dues that the seller must make good on, which can even happen at the closing. Other times it’s something as serious as an issue with the chain of ownership, which could lead to complete cancelation of the home purchase.
The Walk-Through Doesn’t go as Planned
Before you attend the loan closing, you have the right to take a final walk-through of the home you are about to buy. It lets you know that the home is just as you remembered it. You can make sure there isn’t any new damage to the home and that everything looks as you remembered it.
This is also a time to make sure the items the seller promised would be a part of the sale are still there. This could mean appliances, window treatments, or even furniture. If something doesn’t look right or there is new damage to the home, your real estate agent may have to work out a deal with the seller. Sometimes it’s as simple as agreeing to give you a credit at the closing. Other times, you may have a delay in the closing as the seller deals with the issue.
Don’t settle for less than what you were promised just to get through the closing though. Going through the walk-through as early as you can may buy you more time and help you close the loan on time.
The Mortgage Isn’t Clear to Close
Sometimes it’s the mortgage that is the issue. Just when you think everything is perfect, you hit a roadblock with your loan approval. Aside from your credit score changing, other issues can cause a problem with your loan approval. Maybe the lender didn’t receive your tax transcripts on time or they have a question about a deposit in your bank account.
No matter what the bank’s issue is, you have to get it resolved quickly. The best way to sidestep this issue is to have good communication with the lender. Every few days make it a habit to check in and ask about any further documents or information the lender may need to process your loan.
Remember that just because you have a specific day you are ‘supposed’ to close on the loan doesn’t mean the lender will have the loan ready. You have to work together to make sure the loan is clear to close by the intended date.
Surprises at the closing are never fun. Take the above steps to help you avoid these issues and get your loan closed as promised. The more communication you have and the more honest you are with everyone involved in the transaction, the better the process will go.