It’s All in the Details

You’ve been accepted for the home of your dreams! Congratulations! You should celebrate! Unfortunately, not so fast. The acceptance of your purchase offer is an important step, but there are still obstacles to overcome during the escrow period (these obstacles differ by state). Below are five issues you may encounter during the escrow period.

Potential Title Problems

You might put an offer in on a home, thinking that nothing will come up, and both you and the seller are in agreement. Unfortunately, you may have to deal with issues like liens or claims against the home. 

To identify these issues and have them resolved, you need title insurance issued by a title company. Title insurance protects against fraud, liens, forgery, or judgments against the property.

In addition to providing title insurance, a title company is essential for performing a title search. If you are trying to buy a property, a title search lets you know that no other party has a claim to it. 

Before a transaction can advance, any title concerns must be resolved.

Financing Changes

Preapproval, preapproval, preapproval! It’s really that important. Always get preapproval from a bank with a written loan commitment stating they will provide a mortgage for the amount of the home you’re wanting to purchase. 

Even with preapproval, though, there are issues that could prevent your loan from closing like a false statement on the application, a lost job, a sharp credit decrease, or skyrocketing interest rates.

To help prevent these problems from occurring, always keep open communication with your lender so that you know what to do and what not to do during the process.

Insurance Issues

If there are prominent issues found in insurance records like mold or water damage, you may be denied coverage because the property is considered too risky to insure. 

If this happens, you’ll be faced with only one purchase option: cash. Depending on your financial situation, this could ruin everything if you were planning to finance your purchase.

Unfortunate Termite Damage

If you are buying a home, it is likely that your mortgage lender will order a termite inspection at your expense to make sure there is no significant damage to the wood caused by termites or other critters. Even though it may not seem absolutely vital, it is in your best interest.

Suppose the termite inspection finds only minimal to moderate damage, the seller may decide to fix it before closing. If no inspection was performed prior to closing, the repairs would fall on you.

It’s also worth considering whether there’s significant damage that the seller doesn’t want to pay for. Then, you have the option of backing out before being slammed with the repair fees. Or, if you’re in a financial position to fix the issues, you’ll know what they will cost upfront.

Home Inspection Defects

Before putting in your purchase offer, make sure that there is a home inspection contingency written in. That way, if there are any major issues revealed during the inspection, you have the freedom to walk away. 

If you fail to have a home inspection contingency written into your contract and you want to back out after seeing the problems, you could very well lose your earnest money (a.k.a. Your good faith deposit that shows you’ll be purchasing the home).

If the damage isn’t enough to turn you away from the home, the process could still inevitably affect your closing due to negotiations on how the home will be repaired.

Clarion is Here For You

Closing on a home is a tedious and stressful process. Clarion Title is dedicated to providing clarity on confusing topics as well as giving you all the knowledge and information you need in order to have a successful closing. Please contact us today for more information.

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