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Home Buyers Guides

6 Problems That Can Affect Closing Day on a House

Buying your first home is a huge investment, and the closing day is often one of the most stressful days of the deal.

Closing day is when the home buyer and seller sign the final paperwork, and the sale is complete. This is the day the home ownership is officially transferred from the seller to the buyer. 

Closing on a house usually occurs at the title company’s office or escrow agent.

You might think that everything would go smoothly on closing day, but there are a lot of things that can go wrong. Here are six problems that can affect closing day on a house:

1. The home inspection revealed issues that need to be fixed.

Before closing on a house, the buyer will usually hire a home inspector to check for any problems with the property. If the inspection has any major issues, the buyer can ask the seller to fix them before closing.

If the seller refuses, the buyer can walk away from the deal. Unfortunately, this can sometimes happen at the last minute and can be very frustrating for everyone involved. Some of the biggest issues that can arise from a home inspection are:

How can you avoid this problem?

The best way to avoid this problem is to have a thorough home inspection before you purchase the property. This way, you’ll know about any potential problems in advance and can negotiate with the seller accordingly.

2. The appraisal came in lower than the purchase price.

If you’re taking out a mortgage to buy a house, the lender will require an appraisal to ensure that the property is worth at least as much as the loan amount. If the property’s appraised value is lower than the purchase price, it can cause problems on closing day.

This happens more often than you might think. In fact, a recent study found that one in five home appraisals came in below the purchase price.

If this happens, the buyer can either walk away from the deal or try to renegotiate the price with the seller. If the seller refuses to lower the price, the buyer can cancel the deal and get their earnest money deposit back.

How can you avoid this problem?

There are a few things you can do to avoid this problem:

  • Get a pre-approval letter from your lender before you start shopping for a house. This way, you’ll know how much the lender is willing to lend you and can stay within that budget.
  • Don’t be afraid to walk away from a deal if the seller won’t negotiate on price. There are plenty of other houses, and you don’t want to overpay for a property.

3. The closing date gets delayed.

One of the most common problems on closing day is a delay in the closing date. This can happen for several reasons, such as:

  • The lender needs more time to process the loan.
  • The title search came back with an issue that needs to be resolved.
  • There are problems with the property insurance.
  • The closing date can also be delayed if the buyer or seller backs out of the deal.

How can you avoid this problem?

The best way to avoid this problem is to have a realistic timeline for closing day. Think about the different things that need to happen between now and closing day, and make sure there’s enough time to get everything done.

You should also be prepared for the possibility of a delay. If you have to move out of your current home before closing day, make sure you have a place to stay in the meantime.

4. The loan is denied.

When you’re buying a house, the lender will go through underwriting to determine whether or not to approve your loan. Sometimes, this process can result in a surprise denial of your loan.

There are many reasons why this can happen, such as:

  • You have bad credit.
  • You don’t have enough income.
  • You have too much debt.

If your loan is denied, it can cause problems on closing day. You won’t be able to get the loan you need to buy the house, and you’ll lose your earnest money deposit.

How can you avoid this problem?

The best way to avoid this problem is to get pre-approved for a loan before you start shopping for a house. This way, you’ll know in advance whether or not you’re likely to be approved for a loan.

You should also check your credit score and clean up any errors before applying for a loan. Check out home buying tips and red flags to learn more. 

5. The seller backs out of the deal.

real estate agent closing the deal on a house with a happy couple

 

Sadly, the seller backing out of the deal is a common problem on closing day. There are many reasons why this can happen, such as:

  • The seller finds a better offer from another buyer.
  • The seller has cold feet and decides not to sell after all.
  • The seller has financial problems and can’t afford to sell the house.

If the seller backs out of the deal, it can cause problems on closing day. You may not be able to get your earnest money deposit back, and you’ll have to start your home search all over again. In fact, you may not even be able to get into the house on closing day if the seller changes the locks.

How can you avoid this problem?

There are a few things you can do to avoid this problem:

  • Get a loan pre-approval before you make an offer on a house. This will show the seller that you’re serious about buying the house and can afford to do so.
  • Make sure the offer you make is contingency-free. This means that the offer is not contingent on you getting a loan or selling your current house.
  • You should also be prepared for the possibility that the seller backs out of the deal. If you have a backup plan in place, such as renting a temporary apartment, you’ll be able to handle this problem easily.

6. The house is not in the condition you expected.

When you buy a house, you’re buying it “as is.” This means that you’re responsible for any repairs or renovations that need to be done.

However, you should still expect the house to be in decent condition when you move in. If the house is not in the condition you expected, it can cause problems on closing day.

For example, you may have to pay for expensive repairs that you weren’t expecting. This can strain your finances, and it may even cause you to delay closing on the house.

How can you avoid this problem?

The best way to avoid this problem is to have a professional home inspection done before you close on the house. This will give you an idea of what repairs need to be made and how much they will cost

You should also make sure that the purchase agreement includes a contingency for repairs. This way, you can negotiate with the seller to have them pay for some or all of the repairs that need to be made.

FAQs

Q: How long does it take to close on a house?

A: The closing process can take anywhere from a few days to a few weeks.

Q: Who attends closing?

A: Both the buyer and the seller will usually attend the closing. However, there are some cases where only the buyer needs to be present.

Q: Who pays closing costs?

A: Closing costs are usually paid by the buyer. However, there are some cases where the seller may pay closing costs or split them with the buyer.

Q: What happens if the closing is delayed?

A: If closing is delayed, it can cause problems for both the buyer and the seller. What’s more, it can also result in losing your earnest money deposit.

Q: What is a closing disclosure form?

A: A closing disclosure form is a document that outlines the final terms of your loan and closing costs.

Q: Do I need a lawyer to close on a house?

A: While you are not required to have a lawyer present at closing, it is strongly recommended. A lawyer can help to protect your interests and make sure that the closing process goes smoothly.

Conclusion

We can’t stress enough how important it is to be prepared for closing day. There are a lot of things that can go wrong, and you need to be aware of them. By taking the time to educate yourself on the closing process, you can avoid any problems that might arise.

 

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