Purchasing a new home can be daunting, especially for first-time homebuyers. But, perhaps the most intimidating and time-consuming stage is the home-closing process. Depending on demand, market conditions, and the season, it takes between 30 to 60 days to close on a home.
During the closing period, many things can happen. In fact, some of them may come as a surprise to you, and that’s not always a good sign. In addition, such unprecedented events may delay your plans, which can be frustrating.
Fortunately, most of the problems you’re likely to face are avoidable. So, this article will discuss some common real estate closing issues and how to avoid them.
But first, here are some major components of the purchasing process.
Main Considerations When Purchasing a Home
There are several stages that every buyer must go through before finally securing the keys to their new house. Here are the most important ones:
Selecting a real estate agent
Agents understand the market and have the bargaining skills necessary for real estate transactions. As such, your first step, especially as a first-timer, should be finding a good agent.
While searching for a real estate agent, also work on being pre-approved for a mortgage, which will tell you how much you can spend on a home. This process will also help guide your decision-making regarding the house’s location, type, and size.
According to Statista, 99% of home buyers between the ages of 23 and 56 used the Internet in their home-buying process. Of course, you can do the same, speeding up the process of finding a home and saving money.
Make an offer
After you’ve found the house you want, your agent can help you assess the property and determine the amount you offer to buy the home. Your agent will negotiate on your behalf until both parties agree on the selling price and contingencies.
To apply for a mortgage, you need to gather the necessary documents, such as pay stubs and bank statements, then present them to the lender. You will reply to the lender regarding additional requests while home inspections are done during this phase.
Closing on the house
Once everything is in order, the process of closing on the house begins.
With many things taking place during this phase, a lot can go wrong. Here are some of the problems you should try to avoid:
Avoid Property Title Issues
A property title refers to the ownership rights of the seller.
During closing, your attorney or the title company will check all public documents for any liens or claims. Some of the issues that your attorney may come across include:
- Unpaid taxes.
- Unresolved contractor payments and liens.
- The property is the subject of a lawsuit.
- The previous owner still has a claim on the house.
Unfortunately, many home sellers need to be made aware of previous liens, leading to unnecessary closing delays. Previous liens are also one of the main contributors to the rising number of canceled agreements, which were 14.9% of monthly purchase agreements in June 2022.
To avoid such frustrations, you can review the preliminary title report provided by the title company, which is available shortly after the opening of the escrow account. You can get a copy from the lender, title company, or attorney.
Avoid Mortgage Delays
Mortgage delays are common, especially in hot real-estate markets, since lenders are overwhelmed by the high number of loan requests. As such, your file can be delayed for weeks while the loan officer deals with other applications. So, if there’s any missing or incomplete information in your mortgage application file, you might not know about it until the last minute.
You can avoid this issue by confirming all the documents the lender requires before submitting your loan request. Then, once you’ve completed the application, call the loan officer periodically to ascertain whether everything is in order.
Avoid Document Errors
Ensure that all the information given to your lender is correct to avoid delays resulting from errors.
Simple errors like misspelled names or a transposed address can cause significant delays. Therefore, confirm all the information on your loan application before submitting it to the lender, and double-check for spelling errors.
Closing on a new home is an exciting process. Unfortunately, it can also be a frustrating experience, especially when faced with last-minute issues.
The most common problems that may arise during this period include document errors, property title issues, and mortgage delays. So do research in advance to identify potential problems and correct them early. Plus, check your application carefully to ensure there are no errors.