March 1, 2018
March 1, 2018
You’ve been approved for a mortgage, and you’ve found your dream home. You even have a date for the home’s closing. Now all you have to do is wait, right?
Unfortunately, the truth is that the process isn’t truly complete until the closing is finished and the ink is drying on the documents. Because closing dates can be anywhere from two weeks to six weeks (or longer) in the future, there’s still time for something to go wrong.
During the time between when you’ve agreed on terms and secured your loan and home, and the time you close on the house, it’s possible for the whole thing to be derailed. Here are five things that can derail your home’s closing:
Yes, the lender looked at your credit score before approving you for your loan. However, that doesn’t mean that no one will look at your credit again before the closing date. In fact, it’s not uncommon for a lender to pull your credit again ahead of the final document signing.
If your credit score has dropped dramatically since your loan approval, the lender might call the whole thing off. In preparation for your closing, make sure to avoid any activities that could lead to a change in your credit status. Hold off on applying for new loans or credit cards. Don’t make a lot of purchases on your credit card, either. You want to keep your credit utilization low.
Lenders understand that there might be small shifts in your credit. That’s normal. A big change, though, is a red flag that could derail your closing.
You are likely to continue to need to provide documentation ahead of your closing. Maybe you need to finish an income audit or fill out another form. If you make mistakes, it can delay your closing while the problem is fixed.
On top of that, there might be errors in the final closing documents. Make sure you know the terms of the deal, and that you are clear on what should be in the documents. Thoroughly review them if you can. Make sure there aren’t errors or other problems. You could end up derailing your closing if the errors are discovered without time to fix them.
Sometimes, as underwriters and others are doing their due diligence on your home purchase, something comes up. Perhaps it’s information about your title. Depending on what happened with the house in the past regarding ownership, the title might not be clear. If a title isn’t clear, it will derail your closing until the matter can be resolved. If the title isn’t even close to being clear, you might not get your home after all.
Is your new home purchase contingent on selling your existing home? A common arrangement is for you to close on your current home’s sale before or on your new home’s closing date. However, if something has happened and your old home hasn’t sold, or if that closing falls through, you might not be able to close on your new home. The sale of your current home will provide the funding you need for your new home.
When you come to the closing, you need to have money in hand. If you don’t have the down payment or you aren’t prepared to cover other costs, you could derail your closing. Make sure you have the cash on hand, in some liquid account.
You should also have the information you need for a wire transfer. In some cases, a wire transfer initiated after a certain time of day won’t go through until the next day. There are times that wire transfers can take longer than expected. Talk to your bank about what to expect, so you can plan ahead and plan a wire transfer or get a cashier’s check.
Realize, too, that sometimes you need to come up with money on short notice. You might only have a day or two to get the money for a closing, after weeks of waiting. Plan ahead and make sure you know how you will get the money so your closing will go through.