Expect These 5 Surprises When Closing on a New Home
And that's a good thing. Between the mortgage lending requirements and packing, your brain is fried! But then your lender gives you a ring and says, "Oops! We've got some problems."
Really? Yes, really.
Why would there be more boxes to tick and more explanations to be given when you've got a closing date set up. Great questions! Here's why.
This one happens a lot. To qualify for a loan, your lender has to make sure you're a good credit risk. That's why the bank will take a close look at your income, credit history, employment status, and your savings account.
Once you've been pre-approved for a loan, it's very important that you don't change anything with your finances!
“When you’re talking about hiccups during closing, it’s changes from info that’s already been verified. Whether it’s that you’ve had a job change, you’ve incurred more debt than you told us about. or that there’s $3,000 on a credit card that you didn’t account for,” says Austin Lampson, a mortgage consultant with On Q in Santa Barbara, California.
But you also don't want to change anything about your finances either.
- Don't make any new larger purchases
- Don't change jobs
It's critical that the monetary information you submitted at the beginning of the loan process is the same when you close. If not, it could disqualify you or delay closing.
Surprise #2: Mistakes on Your Documents
Even the pros make mistakes. It does happen that a realtor has misspelled names or misplaced documents. That won't necessarily cancel your transaction, but do pay attention to spellings and numbers, making sure they are correct. You don't want a simple mistake to delay taking possession of your new home. (With movers on the way!)
Surprise #3: Transferring Money Does Take Time!
When you arrive at closing, you're responsible for bringing the remainder of your down payment and closing costs. If you're planning to wire funds from your bank, remember it's not an instantaneous transaction. It takes time to transfer a large amount of money to the correct account.
The same is true for a cashier's check. Avoid last minute snags with funding and be prepared.
Check with your lender and/or your closing agent a few days before closing to make sure the money is there. Otherwise, closing will be delayed.
Surprise #4: The Home Appraisal is Lower Than the Contract Price
What happens when the home appraisal falls short of the agreed upon asking price? If the appraisal is slightly lower, then this can cause delays in closings until buyer and seller come to an agreement.
If the appraisal is significantly lower than the agreed upon price, you have 2 options:
- You can decide to make up the difference between the agreed upon sales price and the appraised value. This means you'll need to have additional down payment funds.
- Order a new appraisal with the hope that it will be closer to the purchase price. If you had an appraisal contingency in your contract, then you can walk away without any financial harm. If you waived this contingency, then you can lose the earnest money deposit if the deal falls through because of the appraisal.
The seller must have the items specified in the contract to be in the house at the time of sale. Was the washer and dryer to convey with the property? If they aren't there when you do the walkthrough, all parties should be informed immediately.
Buyer and seller can then come to an agreement. The same is true if something isn't woking correctly in the house. An agreement must be reached before you both proceed to closing.
The best you can do is hold up your end of the legal agreement and make sure that your lender keeps you informed. Even with the best of circumstances, there can be delays in closing. Just remember, this, too, shall pass.
Once the seller hands you the keys to your new home, closing will just be a mere blip on the space/time continuum!
When you're ready to close on your home, turn to the pros at Lilly Title & Settlement. We're a woman-owned title and settlement company in Staunton, VA.