The home buying process can be tedious and difficult. And, when your offer gets accepted, you may assume you’ve overcome the most challenging hurdles. Unfortunately, this isn’t the case. Having your home purchase offer accepted is only the tip of the iceberg. Before you get your keys, there are many obstacles to overcome, and if you stumble on any of them, the purchase might fall through, pushing you back to the starting line.
Luckily, you can train yourself for the daunting steps by learning what to do to prevent and mitigate them. To help you get started, here are five hurdles to closing on a new home.
1. Low Appraisal
Home appraisals are an essential aspect of the home buying process as they ensure you can get the financing you need to purchase your new home. During an appraisal, the appraiser uses different methods such as current market values on comparable homes to determine the value of your property.
To finance your home, your lender needs the appraisal amount to be worth as much as you’ll be paying for it. This way, in case of a foreclosure, they can recoup its losses. So, if your appraisal is low, you may need to put more money down to cover the difference or renegotiate, delaying your closing.
2. Home Inspection Shows Defects
If a home inspection reveals problems, you have two options – back out or renegotiate with the seller. You can only go with the former if you put the home inspection as a contingency in your contract. If not, you’re bound to lose the deposit you put down to show your interest in the home.
As for the latter, it holds up the purchase as you’ll have to negotiate with the seller to have the home repaired. To reduce this delay, ask the seller to credit you money at the closing to handle the repairs.
3. Cold Feet
Since buying or selling a home is a significant decision, most people get cold feet during the closing process. This can be due to a change of heart or because another party made a better offer.
4. Losing Financing
Savvy homebuyers don’t make offers on houses without a loan commitment (preapproval) as lenders can easily back out, causing your financing to fall through. But, even with a preapproval, you don’t have a mortgage until you close.
To avoid losing your financing:
• Don’t make big credit charges before closing
• Don’t overpay for your new home before getting an appraisal
• Don’t lie on your application
5. Paperwork Errors
A lot of paperwork goes into the buying home process, and it’s easy for the parties involved to make a mistake. While you can fix paperwork errors, they can delay your closing by adding a few days of waiting for the right documentation and the right person.
Ultimately, so many things can go wrong during the closing process, making delays inevitable. But, by doing your research and planning ahead, you can protect yourself and overcome any hurdles.