You’ve found your dream home and your purchase offer has been accepted. Now you have to get through one more step before you move in: mortgage closing. The time it takes to close on a home will vary from one person to the next, but when everything goes right, loan closings can be completed in as little as 21 to 28 days. However, not everything always goes according to plan. Issues can arise that can keep you from settling into your new place for weeks and sometimes months longer than you expected. Here, Realtor.com discusses some of the most common pitfalls that can delay the mortgage closing process.
1. Expensive purchases for your new home
Don’t make any pricey purchases with your credit card before closing on your house because it could prevent you from qualifying. After an offer on a house is accepted, some people may be tempted to buy a new sofa, dining set or another expensive piece of furniture. However, real estate experts warn that this could be disastrous. Right before closing, the mortgage lender will pull the buyer’s credit to make sure nothing has changed. If a big purchase shows up, that could become an issue because it means that the buyer is taking on more debt.
2. Death of the original homeowner
If there has been a death associated with the desired property, the home may need to go through probate court first to authenticate the former owner’s last will and testament. If that’s the case, your closing will be delayed. In some states, probate can take anywhere from a few months to a few years.
3. Homeowner’s association issues
If the previous homeowner has outstanding homeowner’s association fees or fines, this could cause delays. In some cases, you may be able to negotiate those fees with the seller; otherwise, you will be responsible for paying them.
4. Verification problems
In some instances, the borrower’s landlord, mortgage company, employer or source of down payment might not be willing to provide verification in a timely manner. Their failure to move quickly can slow you down.
5. Down payment issues
There are times when the lender may require the home buyer to put down more cash; this may take time, especially if the buyer lacks the extra funding.
6. Lender may need additional information
In some cases, additional info may be requested late in the process. Other times, the lender may misplace a document that will need to be obtained again.
7. Scheduling problems
One party—whether the closing agent, attorney, title company representative, lender, buyer or seller—may not be available to meet on the closing day, which can push back timelines.
8. Buyer delays
Additional documents sometimes are required if a buyer is self-employed. If the buyer has multiple sources of income, this may need to be documented and verified as well. If the buyer is receiving a down payment from an unconventional source or a gift, this also could slow down the process.
9. Flood insurance requirement
If your new home is in a flood zone, you might need to get flood insurance. This may require a benchmark survey, which can take three weeks in some markets. Then it must be reviewed by the mortgage underwriter (the person who approves your loan). Flood insurance, and even homeowner’s insurance, also can sometimes be difficult to obtain, depending on your past history with claims, credit and location.
10. Appraisal disparities
Before a mortgage is ever approved, the bank must first appraise the home. If the appraisal comes in low, it may take some time to renegotiate the asking price of the home.
11. Title issues
In some cases, a tax lien against the property might need to be resolved before moving forward with the closing process. Other times, the title may have the incorrect signature or attestation.
12. Property damage
If there is any type of damage to the property, the lender may require repairs before closing.
13. Contract disagreements
The seller sometimes might not agree to the buyer’s contract requests (such as including the entire contents of the home in the deal). This can kill the transaction, or require further negotiation between the agents and other parties involved.
If a homeowner is in foreclosure, it can take up to 10 days to get a payoff from the mortgage company. This often includes legal fees.