Closings: The Weird, Random and Unusual...
Making sure your home has a smooth closing
In my experience most homes that get through the due diligence period will make it to the closing table. Occasionally you may have one fall apart because the house appraises too low. Although even with a low appraisal, I have only ever had one home not move forward to closing. I hear about contracts falling apart because of buyers’ financing but I have personally never experienced that. So, as a buyer or a seller, be reassured that once the due diligence timeline is finished, you will most likely be closing on that property.
It’s not unusual for realtors and closing attorneys to swap their war stories at the closing table as we wait for closing docs to clear through the lender - those weird, random and unusual things that keep a house from closing at the last minute. You DO NOT want to be the subject of any of those stories, so here are a few things to avoid prior to closing on a home:
Large purchases - For many buyers, especially as home prices have gone up, there is a very delicate balance of debt-to-income ratio, one of the major factors in whether or not you qualify for a home loan. Your home purchase will of course add to the debt side and if you have a lot of other debt or are pushing your limit with the amount of your mortgage monthly payment, you might not qualify for the loan any more if you make any extra purchases. I’ve heard of a home not closing because a buyer went out and bought a new truck the week of closing. Safest bet is to put off the new furniture purchases or other larger costs for your new home until you have successfully closed!
Opting out of title insurance - Most buyers see a charge on their closing statement for title insurance. It is optional and sometimes several thousand dollars and so it can be tempting to not get it. Buying title insurance though when you close will help ensure that you can safely sell your home in the future. A seller has to have a clear title to sell. If for some reason there isn’t a clear title, this insurance allows you to sell anyway. I’ve heard stories of long lost relatives showing up and laying claim to the property or fraudulent signatures making a previous sale void. Most of these things will eventually get cleared up but they take a lot of time and legal battles. If you have title insurance, you can sell as soon as you have a willing and able buyer. Title insurance can also keep you from being responsible for past title search omissions. Recently I had a client who was all set to close when they found a past mortgage from a previous owner that hadn’t been paid off! The right title insurance can make sure that you are not responsible for paying those old debts.
Not doing your due diligence - Years ago on the second home I ever sold, the contract fell apart a few days before closing. The buyer was blind, so he tasked his agent with approximating the size of the yard to ensure it was suitable for his two large dogs. The agent had accidentally given him inaccurate information on the size of the yard, and the buyer didn't realize this until he had hired a company to measure for a new fence. The actual yard was way too small for his dogs, and he decided to terminate the contract. There are lots of things to examine during due diligence besides the condition of the house and possible repair negotiations. Some suggestions to research - is there a registered sex offender living in the area? Are there any large construction projects in the works nearby that could adversely affect the property? Which schools are zoned for this property? Are there any environmental concerns on the property or surrounding properties? Do you need to get a survey to see if a neighbor is encroaching on your property? Are you in a high crime area? As always, as your realtor, I will help you find resources to help you gather that information.
When in doubt, ask questions! I know buying a home is an exciting but sometimes overwhelming process. There is no such thing is a bad question. And Latetia is available as my extra set of hands making sure that the whole process runs as smoothly as possible. We are here for you every step of the way from contract to closing!