10 Factors That Can Dramatically Slow The Closing Process On A New Home
1. Lack of Communication with Your Realtor
Your realtor can be your number one asset in the home-buying process, especially when you factor in the complications of escrow. During this time, they will need copious amounts of information and documentation from you to ensure that everything goes smoothly with your purchase. By not being available and keeping an open line of communication, you are delaying your closing procedures. Don’t be the reason your closing process is stalled.
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2. Property Location
Different states have different rules governing real estate. For example, “non-attorney” states, where individuals who aren’t attorneys are allowed to conduct home closings, tend to have sales close more quickly than their attorney state counterparts. (A difference of 30-40 days, compared to 40-50 days) Also, on average, home sales on the West Coast tend to close more quickly than the East Coast.
Know what your contingencies are when you make your offer. Contingencies are conditions agreed upon between you and the seller that need to be met prior to the closing transaction being completed. For example, a popular contingency among buyers is a home inspection. You’re spending hundreds of thousands on a home, you want to make sure you’re getting what you pay for.
In this case, if a buyer submits an offer with a home inspection contingency, this would allow the buyer to back out on their offer if any major structural defects were found. Some other common contingencies are home appraisal and title contingencies. If these aren’t met, this could drastically slow down (or even completely derail) the closing process.
4. Financing Doesn’t Go Through
Before starting your home search, you should always obtain a pre-approval letter. While it does not guarantee a home loan, it does show realtors and sellers that you are a serious potential buyer. The pre-approval includes several pieces of important info such as the loan type, amount and the interest rate. It basically tells you and the property owners how much house you can comfortably afford. If you wait to get pre-approved until after you’ve started your home search, it can delay the closing process.
5. Changes to Your Credit Report
You don’t want to make any big moves financially while you are in negotiations on a home. Any mistakes or additional debt found on your credit report can send a red flag to your lender and potentially cause you to lose your financing. Make a conscious effort to pay all your bills on time, comb through your credit report prior to starting your home buying and dispute any negative aspects you may find.
6. Lack Of Title Insurance
Depending on your lender, title insurance may be required in order for you to sell your home. Essentially, this form of insurance protects the lender’s interest during the escrow process. Without the policy in place, the lender can refuse to give you a mortgage, thus further pushing back your final closing until an agreement is made.
7. Failure to Secure Homeowners Insurance
You’ll need homeowner’s insurance before you close on your property. Anticipate this and begin your search early, around 2-3 week prior to closing, but not before your home inspection and appraisal is complete. You just want to make sure you have it before the day of your closing in order to avoid any setbacks.
8. Problems in The Final Walk Through
Your final walk- through is typically done 3-7 days prior to closing, and allows you to perform a last check on the property. You want to make sure your home is exactly as it was when you made your initial offer. Plus, if any repair requests were made, you want to ensure they’ve been carried out to your specifications. You’ll also want to double check that everything that was listed as included in the sale (refrigerator, washer and dryer, etc.) are in place.
9. Issues with Closing Costs
As your closing date nears, get ready for large sums of money to begin changing hands… If something goes wrong during a wire transfer, or verification of account information, it could not only delay your purchase, but also leave you tied up financially. Make sure that the bank you’re wiring to is able to accept your wire in the timeframe you’ll need it. Also make sure the amount you are wiring is the full amount agreed upon between you and the seller.
10. Seller Having Second Thoughts
Home buying is a big decision, but so is home selling. It’s uncommon for a seller to have second thoughts and ultimately want to kill the deal as a result, but it can happen. While this is unfortunately out of your hands as a buyer, it is important to note their rights as well. The seller can back out on one of two occasions. One, if the final contract has not been signed, or during the five-day attorney review period. Now after that five-day window has passed, the worry is over. Again, it’s exceptionally rare for a seller to want to back out, but it’s something to keep in mind. Thankfully, they’re usually eagerly anticipating the closing date just as much as you are.