5 Reasons a Home Closing is Delayed

One of the most important aspects of your home loan is closing on time. If everything you own is in a storage unit or sitting on a truck scheduled for delivery the worst thing that can happen is a delayed closing. Keep these in mind as you approach your close date to avoid costly mistakes.

Unrealistic Closing Dates 

Average closing times range from 20-40 days. Sometimes, however, it’s necessary to close in less time. It is possible to close in just a couple of weeks but to close so quickly everything has to go perfectly. There is little margin for error.

Does the borrower have all the necessary documents lined up? How is the borrower’s credit? Does the borrower have the assets to close? Will there be issues with documents? Will there be issues with the home inspection or appraisal? Will there be issues with Title or Insurance?

Closing quickly requires an amazing coordination of different parties, paperwork, and a hope that all the issues that are out of our control move quickly. The best option is to choose a reasonable closing date that allows time to resolve potential issues that will inevitably arise during the purchase process.

Appraisal Issues

Before a lender will fund a loan the property typically must be appraised.

The appraiser will look at the quality and condition of the interior and exterior of the home. They will pay close attention to the integrity of the roof and the foundation. They will look for structural issues, check the plumbing, electrical, heating and air conditioning systems.  They will also verify the square footage, the number of bedrooms and bathrooms, check the functional layout and look for potential safety issues.

The appraiser will look at the property’s location and run comps with other similar properties to derive an appraised value.

It’s possible the property doesn’t appraise for a value high enough to support the loan, or the appraisal could turn up issues that need to be resolved before the loan can close. The property may need a roof, require paint, electrical, or plumbing fixes. Or there could be issues with pests like termite damage, or heating or AC issues.

Any of these issues could delay the closing and none of them are likely to be identified until after you are under contract.

Repairs not Completed on Time

If the home inspection or appraisal identified issues with the property that need to be resolved prior to close the seller will have to move promptly to make the fixes. Some fixes can be made quickly but others may require weeks. If the repairs are not made in time then the closing may be delayed.

Inaccurate or Inconsistent Closing Costs

Shortly after you are under contract you will receive the Loan Estimate (LE). The LE will have estimated costs from the Lender, Title, and the Insurance company. There will be estimates for required services and fees.

Throughout the purchase process, the lender will work with the Title company and the Insurance company to verify the costs and fees to ensure accuracy with a final reconciliation at the signing or closing. If you arrive at the closing and the closing costs don’t match what was on the final closing disclosure there will be problems that may require a reworking of the documents. This could delay the closing.

Walk Through Issues

Plan to do a walk through prior to closing on the purchase of your home. Sometimes people take what they shouldn’t (light fixtures, appliances, etc…) or they may leave things they shouldn’t (trash, furniture, etc…). If you identify these issues prior to close there is a better chance of getting them resolved. Your Real Estate agent can contact the seller’s agent and work through the specific items that need to be returned or removed.

If you skip the walk through and sign the papers, however, you may be out of luck when it comes to resolving these types of issues. There will be little incentive for a seller to return property or to remove left items without the sale hanging over their head.

Depending on the type of issue, you could proceed with legal action but that can be time-consuming and costly.

The takeaway is that while it may be possible to close early know that it is probably best to allow time for issues to pop up and be resolved. Plan for the worst and hope for the best.

For more information contact Aaron Walker or Jay Rapson at Aaron Lending, LLC.