You get a very satisfactory feeling when you finally achieve what you desire after putting in a lot of effort and patiently waiting. The same goes for purchasing property, especially for the first time home buyers. But consider how unfortunate it would be when you are finalizing on a house and the deal gets blown off at the last moment.
House closing failure has actually occurred with many buyers, and every house purchaser should have knowledge of the possible risks. Here are some issues that can possibly arise at the closing day:
Change in appraisal amount
The buyer and seller may agree on a particular price, but that would not suffice the lender. The lender has to ensure with certainty the actual worth of the property. Thus, the lender requires a separate appraisal of the property as well. If that appraisal yields a value lower than the loan amount, the buyer may have to come up with the difference.
Insurance problems can arise in the following manner:
- If the property has a history of claims on it, the insurance can become difficult to obtain.
- If you select a house which is located in a disaster prone area, the lender can ask you to choose high risk insurance for the property, which will protect it from any earthquakes or floods. This will result in an extra burden on your pocket that may hinder closing.
Your loan may be pre-approved but that does not stop last minute problems arising with the mortgage.
If any change emerge in the circumstances of the borrower, which would alter their repayment ability, the lender will change the terms and conditions of the loan, and might even possibly deny the amount.
Before the closing day arrives, one of the most necessary things to do is a title search on the property, because:
- If the house had been put as collateral on a prior unpaid debt the sale cannot proceed.
- If the house had any renovations done in the escrow period, but the contractors are yet to be paid, the house may suffer delays in transfer.
At the closing day, the home buyer has to bring the following:
- Insurance policy of the property
- Payment proof for insurance
- Photo ID
- Proof of payment for closingcosts
If there are any discrepancies in the documents or if any document is absent from the file the closing will most probably be postponed.
Before any of the above happens with you make sure that you have done all your preparation. House closing is a very important day and no one deserves it to fail. You can find more information about house purchasing and everything related to it by browsing our blogs.