Purchasing a home can be daunting, and few parts of the process are more daunting than closing day. It can be difficult to deal with unexpected problems. Some can be solved easily, while others can derail the whole deal.
Here are some common closing day problems and how to avoid them.
Surprises on the Walk-Through
The last walk-through you take is the No. 1 cause of unexpected closing day issues. It generally takes place the day before or the day of closing. As the buyer, you don’t have a lot of time to prepare for and react to potential problems.
Perhaps a storm revealed flooding you didn’t know about, or furniture you expected to be included with the house is gone. If the problem is serious, proceed with the deal carefully. You can avoid some revelations by having thorough inspections of the house done before your final walk-through.
It’s OK to ask the current owner if you can inspect the property after heavy storms strike the area so you can look for damp areas or flooding. A last-minute problem doesn’t have to scuttle your deal; negotiate to have the cost of repairs covered by the sellers, and have the money put in escrow. You can get estimates from professionals to verify how much the work will cost.
What the Seller Takes With Them
It’s common for there to be confusion between a buyer and seller about which items will be taken and which will remain. Unless you were particularly attached to an item and consider it a deal breaker, it’s best to just let this go. The simplest solution is to state in a contract what must stay and what must be removed. Be detailed, and check reality against the contract on closing day.
Your mortgage approval occurred more than a month before closing day. Slight changes to your financial situation can alter your credit rating, causing problems right up to the point of closing. Such changes include a new job, applying for a credit card or another loan, failure to pay bills, or an unexpected influx of cash.
If the lender backs out, you will need to find another mortgage provider before you can close. The new lender may adjust your interest rate, and you may need to reconsider whether you can still afford the property.
To avoid lending issues, check in with your lender the day before closing to see whether there are any issues and to resolve them. It’s best to avoid any major financial moves in the month before closing.
Money Transfer Problems
Some financial institutions prefer electronic transfers, while others want certified checks. Bring the wrong paperwork or mess up account numbers, and you could delay the deal. Avoid this by asking your mortgage provider and real estate agent what kind of transfer is required.
A title company will perform a title search on the property, looking at liens, covenants, and past ownership. This is done so that problems are revealed well in advance of closing day so that they can be resolved. Give yourself time to consider any issues or restrictions that come with the property. Tax owed on the property or claims from family members or co-owners can delay your closing. Title problems must be resolved before closing.
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