Imagine you've found the home of your dreams. You qualified for the financing to purchase it, completed the necessary inspections, received a passing appraisal report, arranged for movers and utilities, and now you're down to the week of closing. Whoo-hoo! Everything is done and the closing is right on schedule. What can possibly go wrong at this point, right?
Apparently in the new world of real estate transactions, many things can still throw a monkey wrench into the whole plan and delay a settlement at the last minute. Be prepared to wait is the bottom line here. Sometimes it's a matter of "who dropped the ball" along the way, other times its a no-one-could'v-seen-this-coming kinda thing. Most times, frustrating as it is, these delays are completely out of the hands of the people closest to the buyer (or seller) in the transaction. Your go-to people often haveÂ little power here.
What most homebuyers don't realize is that in a transaction involving mortgage financing there are about a ba-jillion different departments involved in the process. Underwriters and overseers are constantly looking at the buyers finances, credit worthiness, property worthiness, valuation factors, recent bank deposits, condition and/or presence of hazardous risks associated with the property like mold or termites, flood zone certifications, etc over and over and over again, combing for errors and things previously overlooked. If they find a problem or mis-matched/ conflicting documentation, small and insignificant as it may appear, it will surely delay the next step in the process and if the next step is final approval - what's known as getting the "clear to close" - you may need to start making temporary arrangements for moving day and utility transfers.Â Lord forbid something needs to be changed. Oh boy.Â If its a biggie like your APR, it could take weeks to get back to the table again.Â Everything is changing in the mortgage industry and while these changes are designed and implemented to avoid repeating past mistakes asscociated with frivolous lending, it can open up a whole new web of emotions, finger-pointing and threatened legal entanglements between buyer and seller.
There used to be a time when the buyer would go for a pre-settlement walk through and if something didn't work right then concessions would be made by the seller at closing to compensate the buyer, no big deal. NOW if theres a problem and a seller's "assist" needs to be applied or changed the day of closing, you can probably forget about closing THAT day as it will require a whole new review and approval process by the bank. If you think that will happen quickly just because you're supposed to close that day, I have some beach-front property in Arizona I'd like to talk to you about.
But seriously, can this be avoided at any cost?
Nope. Unfortunately, there is no way possible to guarantee a property will close on time, especially nowadays with stricter and ever changingÂ laws on disclosure,Â notification of fees and changes, etc. Â Now that's not to say it will happen more often than not but just make sure you are doing (and providing) everything your lender asks for WHEN he/she requests it and know your contract's deadlines and due dates (a good REALTOR would be on top of that as well).
Finally, once you sign the Agreement of Sale don't make any large purchases or unapproved deposits, don't open any new credit cards or do anything that will lessen your credit score or financial status until the day after you close. Stay on top of things regarding insurance and condo documents, too. You never know where a shortcoming will come from.
Good luck, stay alert and practice safe homebuying out there!