No matter how perfect the agreement between a prospective buyer and a home seller may seem to appear, it’s still possible for things to fall through just because of a failed closing. A clear and solid contract and smooth buying process will only be fruitful if the deal pushes through, and this can only be concluded with a successful closing.
The closing process is more than merely turning over the keys and ownership of the home from seller to buyer. It entails a lot of requirements that need to be met before the home purchase is deemed final. If any of the provisions are not accomplished at the event of closing, this may lead to cancellation of the contract, leaving hours or days of discussions and negotiations futile.
Here are some of the most common problems that may jeopardize the closing, and the corresponding solution to prevent untoward circumstances from getting the contract cancelled:
Errors in paperwork range from a simple misspelling to lost pages or incorrectly declared numerical figures. These things could cause delays in closing, especially if either the buyer or seller does accept the wrong information.
Solution: Ask for a copy of all necessary documents – especially those pertaining to the loan – days before the closing date. Scrutinize every numerical amount on the document (monetary values and interest rates), as well as your personal information. Don’t hesitate to ask about anything that seems off or difficult to understand.
A lot of closing processes may be hinged on the availability of money, whether it’s a delay in the bank or insufficient funding on your end. In some cases, the bank doesn’t deliver enough in time for closing, and you cannot use personal checks to augment the lack. Whatever the reason is, failure to deliver on payments will definitely lead to delays in the closing date.
Solution: You may prepare a cashier’s or certified check for your down payment on the actual closing date. Another option is to arrange for wire transfer of the amount to the closing agent days before the closing. If you’re not sure what the amount is, you may send in excess, because you’ll be able to get a refund anyway.
Missing loan documents
Whether you decide to have the loan package sent via express courier service or a mail delivery company, failure to receive the documents in time for closing will definitely put everything on pause mode.
Solution: Be persistent in dealing with your closing agent or mortgage broker. This way, you’ll be sure to receive the loan documents a few days before the closing date. In fact, you can assume the role of an organizer if you find that your agent isn’t working closely with everyone involved in the home purchase. Feel free to ask all involved parties if they are ready with all necessary papers, and follow them up a few hours before meeting for the closing. Work closely with your agent on this matter, so that all documents are accounted for and ready for your signature.
Issues regarding the property title can derail the closing process. There are many possible reasons for this, some of which include failure of the seller to settle matters with a contractor or the title company, or ownership disputes with the seller’s family.
Solution: Aside from emphasizing the importance of a clean title, you should look into the title report as soon as the escrow account is opened. If you don’t receive a copy, ask one from the lender. It’s also best to take out a title insurance to protect your investment from issues on the title at the day of closing and onwards.
Some lenders are notorious in asking for last-minute details such as documents, missing checks, or required insurance policies. If you have no idea about these little surprises, there’s a big chance that you’ll have to reschedule the closing.
Solution: Ask the lending company if all requirements have already been fulfilled. It would also be a great idea to bring all documents during the closing – and we mean every single piece of paper that you encountered during the buying process!
Surprises during final walk-through
Your giggles of delight over almost buying your dream house will definitely turn to gasps of horror when you discover that the seller took away some of the built-in items supposedly included in the purchase (or you find a gaping hole in one of the walls).
Solution: Although this is a definitive reason to delay the closing, have your agent discuss the issues with the seller’s agent as soon as you discover them during the walk-through. You may tell your agent about the items that you will accept as part of the deal, the cost of reparation, and the need for the seller to agree on paying for the missing or damaged items. You may even arrange for the seller to pay more of the closing fees, or have some of the seller’s profits from the sale transferred to an escrow account to pay for repair costs. Bottom line, you should be firm and swift in bringing up any surprise discoveries even before the closing date.
Additional tips for the buyer’s protection
To protect you from problems during closing, here are some useful tips:
- Any changes in the closing as a result of the abovementioned factors must be agreed upon by both buyer and seller. All alterations in the closing must be put into writing and signed by the seller and buyer. These signed agreements must be included in the closing instructions.
- Do not sign the document unless you have read it carefully. You have the freedom to read every word in the documents, even if everyone has to wait for you to finish reading.
- Try to avoid delays on your part by covering all bases. Remember that the loan commitment and the escrow have expiration dates.
- Be on time during the closing. That goes for the seller, agents of both parties, and your spouses.
- Failure in closing may put your earnest money at risk if you don’t know the stipulations on the purchase and sales contract. Have your attorney check the contract, especially on clauses that may affect your financial investment.
- Make sure that your personal information on all settlement records is accurate and correct. You will receive the settlement statements from the closing agent a few days after the closing.
The closing is just as important as any other step in the home buying process. Do not make the mistake of dismissing the actual closing as a mere formality, because the deal becomes complete and final as soon as the closing is done.
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