Purchasing a Home: Hurdles You May Have to Overcome

You’ve put in the hard work of saving for a new home and have viewed multiple homes for sale. You’ve put in an offer and the sellers have accepted it! Congratulations! But what comes next? When closing on a new home, several elements are in play at the same time — performing title searches, ordering surveys and inspections are all happening behind the scenes. But what can prevent you from getting to the closing table and into your new home? Let’s look at the common reasons why closings are delayed and what you can do to prevent them. 

5 Common Reasons why Closings are Delayed 

1. Inspections show termite (or another pest) damage: in most states, the lender will want a pest inspection performed on the property to protect their investment and interests. The inspector is mainly looking for any sign of termite damage or carpenter ant damage. These pesky pests can help themselves to the buffet of the wood in your home and compromise the integrity of the structure. In the case the inspection does show signs of damage, it will need to be fixed before closing. This can delay the closing by several days or weeks. 
2. The property does not appraise high enough: an appraisal will be performed on the property to determine its value. This is done for tax purposes and in the case of purchasing a home, performed to protect the lenders’ interests. They want to ensure that the home is worth what you’re paying for it. If the appraisal comes in lower than the listing price, you may have to re-negotiate with the seller. This can delay the process as the parties go back and forth. 
3. Issues with the title: the bank will also require a title search to be performed to protect their interests. The title shows all previous owners of the property to ensure that nobody else has rights to the property. They are also looking for any liens placed on the property, which if any are found, the seller will have to clear up before closing can proceed. 
4. Financing issues: getting preapproved is a huge first step in the process. A reputable mortgage company will take a look at your finances and decide how much you can afford each month for a mortgage payment. As a buyer, be sure to keep your financial situation steady through the process- don’t open any new credit cards and try not to change jobs. These are just some reasons why the bank would decide to reject your application and you may lose your financing. 
5. Differences between the Good Faith Estimate and the HUD-1: the lender will provide a good-faith estimate at the beginning of the pre-approval process that details the closing costs and what you can expect to pay. They’ll then again provide this estimate when you put in an offer on the home to match the specific details of the property. You’ll also receive a HUD-1 document at least 24 hours before closing. The good faith estimate should be close (within 10% difference) to what is provided on the HUD. Some banks will try to take advantage of people by offering seemingly low rates up front that can’t be honored in the end. If this is the case, you may want to find another lender. If the seller agrees to extend the contract, this can delay the process while essentially everything is repeated with a new lender. 

The Bottom Line: It’s a Complicated Process

There are so many players involved and a lot of stars have to align throughout the process to ensure it’s a smooth transaction. Having the right title company, real estate agent, insurance company, and lender on your side can not only protect your financial interest, but it can also make or break the transaction. But taking time to familiarize yourself with the process and asking questions can help avoid some of the hurdles mentioned above. 

Clarion Title: A Trusted Partner in the Process 

If you’re ready to purchase a new home in the Birmingham, Alabama area, the team at Clarion Title is your trusted partner throughout the process. Our vast network of qualified resources have years of experience and are ready to help. If you need to order a title, ask a question or just get in touch with us, call us today at 205) 291-0083 or contact us online. 

This material is provided as a courtesy and for educational purposes only.  Please consult your title professional for specific information regarding your situation.