Purchasing a home is a stressful experience for anyone. Closing day on your home is an especially difficult day because you are signing off on your enormous purchase, and accepting it as it is. Unfortunately, problems at closing are like death and taxes, inevitable. Issues pop up all of the time on closing day, so do not panic. Some problems are small and easily resolved, while others could make you decide to walk away from the purchase all together. Here are the top 5 closing day problems and how to fix them.
Property
Typically the final inspection of the property is conducted on the day before or morning of closing day. The final walk-through is usually the source of the most unexpected problems for the buyer. This can be the most stressful of the closing day problems because the buyer has little time to react to any problems found during the final inspection. For example, a heavy rain storm could reveal a leaky roof issue or a basement that floods. It is difficult to assess the amount of work needed to make these repairs off the cuff unless you’re a contractor, so many times these issues cause the deal to fall through. However, last minute problems should not cause you to walk away from purchasing the home of your dreams. If it appears that a a big repair is needed, delay your closing until you get all the information. Arrange for estimates have have your repairs done by more than one contractor to get an idea as to how much it would cost to have the repairs made. Negotiate with the seller to pay for the repair, and put the funds in escrow. You’re so close to closing the deal, the seller will not want to start all over again, so they may be open to paying for some of the repair costs so they do not lose you as a buyer.
Title
An issue with the title is one of the closing day problems that may require time to remedy. Taxes owed on the property or liens or disputed ownership of the property are issues that could delay your closing. A title company would bring these problems to you before or possibly on closing day. Issues or “clouds” on a title could include judgments against previous owners where money such as child support is due, and encroachments, or property line disputes for the property.
Credit
Typically you are approved for your mortgage at least a month before closing day. A lot can happen in a month, so changes in your credit are possible. Unfortunately, changes in your credit score can impact your mortgage approval. While waiting to close, it is important to pay close attention to your credit rating and watch it carefully. Any late or delinquent payments on bills or loans, applying for an auto loan or a change in jobs would all effect your credit score. If you need to buy a new car or leave your job, wait until after closing day so you don’t lose your mortgage. A change in credit score could cause your mortgage to fall through. It is a wise idea to touch base with your mortgage lender the day before closing to make sure that everything is in order. For more information about your credit and how to maintain it for purchasing your home, check out our blog “Clean Up Your Credit Score Before You Buy.”
Seller
You fell in love with the home you are about to purchase for a number of reasons. Make sure that the furnishings or window treatments that were in the house when you first saw it are not part of the reason you fell in love with the home and decided to buy it. If you can’t imagine living in that house without the window treatments, and it is a big part of your love for the home, make sure that it is part of your agreement that those furnishings are left with the house. A problem buyers have on occasion is assuming that certain things would be left with the house when it is purchased. You could love how outside the kitchen window there are blooming rose bushes lining your view. Standing in that kitchen for the first time during the open house, you might have imagined yourself washing dishes overlooking that beautiful garden view. However, those rosebushes could be a gift from a deceased relative, so the previous owners are planning on taking them with them when they move (true story). Ask yourself if there is anything in or outside the house that makes the house more appealing to you.
Money
The biggest part of closing day is the transfer of money to purchase your property. Some banks require certified checks, while others prefer to use electronic transfers. Assuming that the bank will accept one instead of the other can hold up the closing because the bank might not accept your transfer method. Avoid this unnecessary hold up by finding out from your real estate agent and mortgage provider which method you should use to transfer your money to purchase your home. Double check all account numbers and exact dollar amounts to avoid any silly mistakes that could hold up your transaction. Do you have all the funds needed for closing day? Check out our blog Hidden Costs of Buying a Home to find out what to expect to pay on closing day.
Closing Day Problems
Closing day problems can put a damper on your closing day celebration, but most of the time they do not mean that the deal is off. All of these problems, property issues, title problems, credit score changes, and money transfer errors could delay your closing day, but they are not necessarily deal breakers. Closing day problems can cause the home buyer (and seller) extra hassle and headache but if the two work together, most problems can be resolved. Check out our “Top 4 First Time Home Buyer Mistakes to Avoid” to make sure that you’re prepared for buying your first home.
