This month, we are going to focus on some of the common issues I see pop up that could delay a closing on the purchaser’s side in a real estate transaction. Next month, I will dig into the seller’s side, so stay tuned!
Not enough money for closing costs
Paperwork issues.
A buyer typically has 45 days to get a mortgage commitment. If you are in a hurry to close, it could be difficult to process the loan quickly if your financial paperwork isn’t submitted fully. Usually, a lender is looking for two months’ worth of bank statements, pay stubs, tax returns, information from 1099s, profit and loss statements, business banking statements, etc. Everyone’s finances look different. Getting your paperwork in order and ready to present to a lender even before you start looking for a new home, really helps the process run smoothly.
Spending large amounts of money
Not managing expectations
There are many moving pieces in any real estate transaction, especially if both parties are selling and buying. Understand all the terms and ask if you don’t understand something. Contingencies, hand money, on or about closing date, etc. Your closing dates will need to be as close as possible if you are buying and selling a home, otherwise you could end up in a hotel. The best way to stay on track is having people that know the process on your side and can work with you through the ups and downs.
Not responding quickly
A loan officer, your attorney, your real estate agent. There are many people involved in this process. If you take days to get back to people, it affects everything. Keep your team up-to-date if you are traveling in case something comes up and they need to contact you. Respond to emails, texts and calls in a timely manner. Don’t put in an offer and then leave town. Be available and it’s a lot less stressful.
Locking in your rates too soon.
If your interest rate expires, it can be a big change in your plan. Let your attorney know up front, so they can work to get the house closed by the right date. Talk to the seller and see when they are really ready to close. If they aren’t in a hurry and you are, it might not be the best home for you.
Waiving an appraisal
If you do this and the appraisal does not match what the lender needs it to be, you better have extra cash since the loan won’t cover the costs. (See last month’s newsletter for more details on this.)These are just a few of the issues I have seen in my experience. The main thing to think about is being prepared. Everything you can do in advance, do it. And have the support you need around you so you understand the process and feel confident in your purchase. Buying a home is exciting and a new chapter, but comes with its own set of challenges.
