When you’re closing on a home or another piece of real estate, the last thing that you want is any surprises – especially at closing.
After weeks (maybe months) of hard work, negotiation and paperwork, everything is supposed to come together on closing day. While most real estate closings come and go without any trouble, some potential problems could turn what should be a day of excitement into one filled with stress and frustration.
1. Title issues
A title is said to be “clouded” when there are problems that could affect ownership rights or draw into question an owner’s right to transfer their interest to someone else. Issues like undisclosed liens, disputes over boundaries with a neighbor and even clerical errors can all lead to major delays.
2. Financing problems
Buyers sometimes find out at the last minute that their loan won’t make it through underwriting. Challenges in obtaining financing can be caused by unexpected changes in the buyer’s credit score, employment status or other financial circumstances. Even something as simple as a buyer putting some new furniture on a credit card can cause a mortgage lender to pull out of the deal.
3. Home inspection fails
Lenders generally want to make sure that there are no hidden problems with a property that could affect its value. If a last-minute home inspection reveals major problems that weren’t already disclosed, that could be the end of the deal.
4. Appraisal gaps
Lenders also want to make certain that they aren’t lending more for a property than it is actually worth.
5. Cash flow snags
Buyers need to get their downpayment to the closing agent on time – and problems can arise through nothing more than electronic errors or delays between one bank and the next. That’s why many closing agents recommend that buyers use a cashier’s check or certified check to bring their downpayment to the closing, instead of relying on wire transfers.
Closing on a piece of real estate is a lot more complicated than many people realize. Obtaining qualified legal assistance well before the big day can save you a lot of hassles and keep your real estate deal on track.