Top Last-Minute Financing Blowups
Sometimes a perfectly-executed deal can implode due to avoidable financing issues. Keep an eye out for these common problems throughout the closing process – don’t let them derail the sale!
- Missed liens at closing. The title company needs to give the lender a 100% clear title, and all seller liens must be paid and satisfied.
- Spouse not at closing. If your client is married, their spouse needs to attend the closing, along with anyone else listed on the mortgage or title.
- Incorrect property expenses. If the property taxes, homeowner’s insurance or homeowner’s association dues are much higher than originally estimated, the debt to income ratio may be too high to qualify.
- Occupancy concerns. Sometimes, an appraiser overhears or is told something different than the lender is told.
- Unable to obtain insurance. If your client is unable to secure insurance, it will pose an issue during closing.
- Unknown lender. An inexperienced loan officer can create problems. The deal may turn out to be completely different than the buyer expected due to changed fees or rates.
- Borrower-related changes. Any financial issues, such as credit card debt or unexpected unemployment, that could affect the borrower’s position will also affect closing.
- Property issues. The lender needs to know upfront if the seller has only owned the property for a year or less or if there are any inspection issues prior to appraisal.
- Money needed to close. Not receiving the down payment money until right before closing could cause a delay, as could undocumented or unexplained large deposits.
Of course, many issues on the seller’s side usually arise right before closing. Stay on the lookout for these problems, as well:
- Seller on contract documents is not listed as the owner of record.
- Seller owes more than previously thought and cannot close without increasing the sales price or coming up with money out of pocket.
- Seller did not inform the buyer or agent of large HOA transfer fees and dues that are paid at closing.
- Work agreed to be completed prior to closing is not finished at walk-through.
Bottom line: Pay extra close attention to these details. A seemingly minor issue can delay or even prevent a successful closing.
