Jen Dâ€™Angelo is an expert in the real estate industry, specializing in Right Residentialâ€™s homes for sale. She currently lives in Chicago with her husband and her German shepherd, Max.
Youâ€™ve found the perfect home, youâ€™ve had it inspected and appraised and you have your preapproval letter in hand. What could go wrong? The bottom line is, there are many surprises buyers face when preparing for a home purchase.
Appraisers will look at the purchase contract and determine if the home appears as it should. If anything in the house is missing (even small things like ceiling fans or screens), the contract has elements that are inaccurately listed or repairs that relate to the structure and maintenance of the home that need to be done, lenders can put a stop to the purchase until they are completed.
To stop this before it happens, take an in-depth look at your inspectorâ€™s report and address any problems that you think might be a sticking point with your lender. Many loans require homes to be in great condition before it will go through, so make sure any problems are fixed before closing.
The older the home youâ€™re buying, the more likely it has had its fair share of owners, and with multiple owners, the home could have issues. If a debt is owed on your home (even one you arenâ€™t aware exists), a lender can veto your purchase. These issues can include bankruptcy (common in short sales or foreclosure purchases); liens from banks or contractors; or lawsuits and court judgments that asked the previous owners to pay, and wonâ€™t allow a purchase on the home until the debt is gone.
Permits can also be a problem, especially when the previous homeowners have built a new room, porch or other section of the house but failed to get a permit to build.
Occasionally, a house is placed on the market at for a substantially higher price and appraises for much less. These situations can be a huge problem for potential buyers who are looking for a great deal and donâ€™t want to start their home ownership â€œunder waterâ€ with their mortgage.
There are usually three options for appraisal problems. First, the buyers can ask the seller to lower the agreed upon price to the appraised price. Second, many contracts allow a contingency for the buyers to walk away from the sale in an under-appraisal situation. Third, the buyer and seller can try to negotiate a deal that will leave them both satisfied with the purchase.
In many cases, sellers will cover closing costs, reimburse for upgrades or drop the price slightly in combination with the previous two options to help the deal go through.
Canadians have become more and more dependent on credit, and the result of this dependence is lower credit scores and problems securing home mortgages. Additionally, bankruptcy, unemployment and underemployment can affect the ability to buy a home and or cause financial issues related to getting a mortgage.
Buying a home takes preparation. Save as much as you can, do your research on mortgages and clean up your credit score for the best chance at getting a home hassle-free.
In this volatile financial market,
mortgage preapprovals arenâ€™t as secure as they once were. What was in
years past a binding agreement for
specific loan terms has now become a something that can be pulled at a momentâ€™s notice.
Although itâ€™s a great idea to comparison shop for mortgages and get the preapprovals, make sure you discuss your plans for what type of house youâ€™ll be purchasing before you take that next step. Many townhomes or condos can make lenders wary, and planned developments, locations or age can also cool a lenderâ€™s hot preapproval.
There is no industry standard for preapproval, so do your research on mortgage lenders and brokers, as well as different loan types, and try to nail down what type of home youâ€™ll be buying before you start looking.