One of the most exciting times during the home buying process is the anticipation felt upon arriving at your final destination; the closing! Sadly, it happens all too frequently that certain things do not line up perfectly and there is the potential for angst, disappointment and ultimately the completion of the sale not going through. Below are the three most common things that go wrong at closing and most importantly, how to avoid them!
1. Walkthrough
In my previous post, I discussed in detail the importance of not scheduling the walkthrough the day of the closing! If I were selling a home, I couldn’t imagine anything more stressful than the buyer showing up at the closing, asking for things to be addressed or fixed. Sellers need time to process what needs to be done and to factor in the financial ramifications of fixing or addressing concerns. So, to avoid having stressful negotiations at the closing table, definitely schedule your walkthrough days or even weeks in advance!
Also, to the buyer’s benefit, having the walkthrough in advance guarantees that there will not be any surprises as well. Potential miscommunications regarding what should be left or removed from the property can be seen and addressed. This will save time and hopefully avoid a potential blow-out at the time of the closing. Ultimately, if conflict does arise, make sure to enlist the expertise of your trusted agent who deals with these types of negotiations all the time!
2. Lender Issues
Almost all buyers will be working with a lender in order to be able to purchase a home. Taking the extra step to make sure everything is lined up correctly from the lender’s perspective is crucial before the closing. Make sure that there are no errors in the paperwork and that there are no missing documents. Also, make sure that the lender has all of the correct wire information and timing so that there is no delay in funding. Sadly, when it comes to lending issues, there is only so much that can be controlled. During the most recent recession, for example, lenders would be lined up and between the accepted offer and closing, the lender went out of business, thus breaking the deal! To minimize the chances of this happening, research your lender to educate yourself fully on who you are teaming up with.
3. Big Purchases or Change in Life Circumstances
Life happens and unexpected things can come up. If at all possible, one main rule of thumb is to be careful not to make any big purchases before the closing! This has the potential to affect your debt-to-income ratio and opening a new credit account or having high balance can result in credit being pulled again. This can result in a delay in loan processing or worst yet, a loan denial. To be on the safe side, think and double-think through all purchases, and if it can wait, definitely do so until all is finalized at the closing.
Life circumstances can also change the outcome of a closing as well. Most have little to no control over these things, but being prepared for their potential might at least give some piece of mind. Someone may lose a job, or have a death or separation in the family that can’t be avoided. These kinds of changes can ultimately affect the outcome of the sale, delaying or canceling it all together.
Having a realistic mindset about the closing can help tremendously in increasing chances of the sale going through to completion smoothly. Hopefully, the above tips are helpful in encouraging a realistic perspective and motivation to check, double-check and be prepared plenty of time in advance!
Sources:
http://chantelray.com/buyer-school/buyers-faqs/top-5-things-that-can-go-wrong-with-closing/
http://www.zillow.com/home-buying-guide/closing-issues/