As it involves the precise alignment of many factors, your home transaction is a fragile thing; even a small item out of place can derail the whole process. Whether it be a clouded title, a bad home appraisal, credit issues, or a rapid change in interest rates – one or any number of these types of issues can turn your closing into a real hassle.
These bottlenecks aren’t just troublesome for the buyers, but also the sellers and of course the agent themselves. Moving plans get jumbled, contingency plans need to be thrown together to cover damage control and your stress levels can go through the roof. You aren’t the only one just ready to be done; your agent wants to help get you there.
80% of the problems in closing transactions fall into three basic areas. Here are some things to stay on the lookout for as steering away from these problems can save you much trouble:
Good planning in advance can save a lot of hassle here. State clearly in writing that only lender-required repairs will be done. If this is left open as a seller you may risk the buyer coming back with a laundry list of items that will slow your closing to a crawl. A lender-required note usually limits repairs to structural, mechanical, or health/safety concerns; keeps the nit-picking about little chips in the paint or decor issues to a minimal.
Your lender has to assemble a large amount of paperwork, and complete dozens of documents based on the information in your loan application. This includes verfying all information for accuracy by checking the applicants employment status, funds, and income level. This complex process takes time, so make sure as the home buyer you are submitting all the information in a timely manner – returning info in a piecemeal manner is sure to slow this process.
This most tricky of all closing problem areas is tough because the underwriter has the power to approve the loan, approve it with additional conditions, or suspend the file until conditions are met — in which case the borrower starts the entire underwriting process from the beginning. Underwriters check to be certain the loan meets guidelines for debt to income ratio, loan to value ratio, credit score, and other qualifications. The process of underwriting can really be a choke point, especially if the home is in a high price range.
Whether you are buying or selling the best way to avoid any of these potential pitfalls is to work with a qualified REALTOR. Your real estate agent is your advocate in the process and can help make these technical issues a lot less of a problem, and also helps in shuffling the mountains of paperwork involved in a real estate transaction.
If you are buying, the first step is to start finding homes you like. Secondly, go ahead and talk to your REALTOR® about getting per-qualified and finding a lender.
If you are selling, get a FREE comparative home value analysis of your home so that you can price it competitively for the area market you live in. You can get your CMA on my website here.