Buying your dream home can mark the beginning of a new chapter in your life. However, although you might be prepared to buy a house, you may encounter problems that could derail the closing process. Below are some things that could potentially cause a closing delay and steps you can take to prevent or mitigate them.
Low appraisal
Before closing day, the buyer’s lender often requests a home appraisal to ensure that the sale price of the home aligns with its fair market value. If the appraisal is lower than the agreed-upon price, it may hold up the process. Lenders will not approve loans that are more than the appraisal amount.
If an appraisal is too low, you may either have to pay cash to make up the difference or request the seller to lower the selling price so that your loan is not canceled. However, if you think the first appraisal was not correct, it is possible to get a more favorable second opinion from another appraiser.
Title issues
Title insurance protects a homebuyer and lender against post-sale claims to the property. The policy is meant to protect you from any financial loss due to an unidentified error at the time of purchase. Before a home-buying contract is signed and the deal is closed, homebuyers are required to do a title search and obtain title insurance. Homeowners are often advised to hire a title company to complete the title search and issue title insurance.
The title search is meant to ensure that no one has a legal claim to the property you intend to buy and it can help you to avoid title issues. Title issues, such as a claim on the property or a lien, can end up causing closing delays. Ordering a title search early in the closing process is often recommended because it will allow you to resolve any potential issues in good time.
Financing issues
Many homebuyers make offers on homes after getting preapproval letters from lenders. In this case, the lender commits to providing a buyer with a mortgage of a certain amount. However, a loan may fail to close if a person lied on the application, interest rates end up increasing significantly, or due to changes to one’s credit profile. To avoid such problems, it is ideal to ask
your lender for advice on how to prevent any issues.
Conclusion
The process of purchasing a new home can be stressful for buyers. This is the case especially if factors such as low appraisals, title issues, and financial problems contribute to closing delays. Fortunately, you can avoid a delay if you are aware of these potential challenges and then proceed to take the necessary steps to prevent them in advance.