Buying a home is a process. There are multiple people involved in making sure that regulations are followed and conditions are met. Chances are you’ve heard from someone about a deal falling through because of some sort of home buying problems.
With all the moving parts, there are many things that can happen during your purchase that can cause delays or even end the deal all together. This is why it is important to find a trustworthy realtor and lender. When you have good people on your team, they will do anything they can to close your loan on time with as little turbulence as possible. Lets look at what can go wrong so you can better understand how to handle and avoid these situations.
Home Buying Problems Caused by the Buyer
Not telling the truth on your loan application:
If you are hiding something in your loan application, like debts or income, your transaction will most likely be in jeopardy. Lenders must verify and re-verify everything in your credit and income profile. Be upfront and allow your lender to help you work through any problems during the pre-approval process, so that you dont run into any problems later in the process of buying a home.
Adding Additional Debt:
One of the main factors in your pre-approval will be your debt to income ratio. Adding any sort of debt will change this ratio and your chances of getting final loan approval. DO NOT buy your furniture prior to getting the keys to your new home. Most lenders will pull a credit refresh at the end of the transaction to make sure there have been no new inquiries on the credit report. Adding debt prior to loan closing is one of the DEADLY SINS for mortgage approval.
Any Change in Job Status:
If you lose your job, change jobs or any pay structures your pre-approval status has also changed. While losing your job is quite obvious, changing jobs might not be. If you start with a new company and have a grace period for permanent improvement, there will be challenges in getting the loan approved. Changing from salary to commission or becoming self employed will definitely put things on hold. Avoid all of these until your loan closes if possible, or at least be prepared for your home not to close on time.
Not providing paperwork to lender in a timely manner:
This will definitely delay the closing of your transaction. While it may be frustrating to be asked continuously for paperwork from your lender, it is vital that you proved the necessary documentation as soon as possible. Understand that your lender is typically only asking for paperwork that is necessitated by their guidelines and investors. Both underwriters and investors can be picky about what paperwork is needed.
Home Buying Problems Caused by the Realtor
They Don’t do the Research:
If the Realtor doesn’t do their homework prior to listing the property, there may be issues with financing or property value. If the home is listed for an unrealistic value and the appraisal comes in low, there will be delays and potential closing issues. Typically when a Realtor lists a home they will do some research on the types of financing that will work for the property. Due to the condition of the property there may be limits on the types of financing available. If there are repairs required on the home they will either need to be completed prior to closing or be done using a renovation type loan.
Home Buying Problems Caused by the Seller
Loses Motivation to Sell:
If the seller is selling their home due to a new job or relocation, there is always a possibility that the job could fall through. If that happens the seller may decide not to sell, or they could have difficulty finding their next home and need to delay the transaction.
Doesn’t Cooperate with Inspectors and Appraisers:
If the seller delays or denies access to either the inspector or appraiser for the transaction, there will most certainly be delays in the closing of the transaction. The appraisers, especially in the busy season, have packed schedules and can be weeks out when first ordered, let alone rescheduled. What’s the difference between appraisals and inspections?
Has Title or Lein Issues on the Property:
If there are issues with the title or the seller has leins on the property, there may be delays in getting the loan closed. The title company should be searching for these items early in the transaction to prevent surprises at the end of the transaction.
Home Buying Problems Caused by the Lender
Not Issuing a Proper Pre-Approval:
If the pre-approval isn’t done correctly there may be issues during the loan process. A proper pre-approval includes a credit pull, documentation collection/review, and a run through the automated underwriting system. All of these actions should provide the lender with a solid base for pre-approval and prevent major issues during the home buying transaction.
Rates Change Prior to Locking Interest Rate:
The interest rate market fluctuates throughout every day. If the lender is not on top of the interest rate movement and the markets, your rate could be increased prior to locking. A higher interest rate will affect your monthly payment as well as your debt to income ratio and potentially your approval for the property you want to purchase.