You have found the perfect home. Your offer has been accepted, and all that remains is for a few legalities to be completed before the landlord hands you the keys. But before you pop the champagne, there are a few things that need to be taken care of. Just because you are about to close on a home doesn’t mean that it’s yours. From the point when the offer is accepted to the final handover, you can run into any number of hurdles that could break the deal, and here are 14 of them.
Termite inspection shows damage: Before purchasing any home, it is crucial to conduct a pest inspection. Termites, cockroaches, and other pests can cause significant damage to a home. This is usually carried out by the lender to protect their interests in the property. Stories of people abandoning homes after discovering a termite infestation have been far too common. If you spot a possible termite infestation, then it is better to walk away from the property.
The appraisal value is too low: Lenders will ask a professional appraiser to estimate the market value. The estimated price is compared with the purchase price, and if there’s a significant difference, then it could affect your chances of closing on a home loan or mortgage. If you are purchasing a second-hand home in an area that has seen little appreciation over recent years, this can happen, especially if you are buying above its assessed value.
The house needs too much work: Buying any piece of real estate is always about assessing risk versus reward. You need to consider whether there will be enough left from the sale proceeds after carrying out repairs before deciding if you should proceed with the deal. Be sure that all needed renovations have been taken into account as they may end up costing you more than you think.
A house in a flood zone: The Federal Emergency Management Agency (FEMA) has created the National Flood Insurance Program to offer affordable flood insurance protection for property owners and renters. If your home is located in a FEMA-designated special flood hazard area, it will require this type of policy if you want to get financing from a lender. You can find out by doing an online search or checking with your local building department.
The title search doesn’t show positive results: Home buyers need to consider the title of a property as it is critical in determining if they will be able to take possession and use it. The title search goes back through time, starting from when the home was first built until now. This can uncover any legal claims on the house, such as unpaid taxes or outstanding mortgages.
The final walk-through shows more problems: Once you have settled all financial matters with your lender and handed over closing costs, there’s nothing else stopping you from taking possession of your new home. But before moving out, everything agreed upon during negotiations must be fulfilled, including repairs which contractors usually do at no extra cost. This could include minor fixes like painting walls or replacing light fixtures or major work like repairing the roof. If the final walk-through shows more problems, then it might break the deal.
Lien is placed on the house: If you buy a newly built home, it’s possible to have liens filed against the property until construction loans are paid off. A lien can be imposed by any supplier who supplies labor or materials for building your new home. Your lender will need up-to-date information about all pending liens to release documents and ensure there won’t be any problems when closing.
Home inspection shows defects: When buying a home, it’s essential to get an inspection done by a professional before the transaction is completed. This will give you peace of mind and protect your investment. A basic home inspection covers the foundation, roofing, electrical wiring, plumbing, and heating systems, as well as insulation and ventilation, among others, so that any potential problems can be identified early on.
One party gets cold feet: The biggest hurdle to closing on a new home is when one of the parties decides that they don’t want to proceed. This could be due to financial problems or other issues such as relationship breakdowns. It’s important not to let emotions get in the way while making a decision.
Your financing falls through: There are many different reasons why your financing may fall through. It could be that you haven’t provided all of the necessary documentation, for example, if the appraisal comes in lower than expected or there’s a change to lending guidelines. If this happens, it can cause significant problems that will affect everyone involved.
Title insurance proves costly: Title insurance is an essential part of buying property as it protects against losses resulting from claims made by third parties, such as errors on public records, incorrect legal descriptions, undisclosed heirs, missing documents, or boundary disputes, among others. The cost depends mainly on how much protection you want but expect rates between 0.25 percent and 0.75 percent of the home purchase price.
The closing date gets delayed: The home is closed only after all the legal paperwork is transferred to your name. If it’s delayed, you are still responsible for making monthly payments and can’t move in until this date.
Your lender requests more documentation: The final hurdle that needs to be cleared before closing on a new home is receiving additional documents from your lenders such as proof of income, evidence of insurance coverage, or an occupancy certification for FHA loans among others. It could also involve clearing up discrepancies between what they have received and verified information with other sources like employers, banks, credit agencies, or brokers.
Unforeseen problems with property: Purchasing a new home is one of the most significant investments you will ever make, so it’s essential to be aware that there could still be unforeseen problems with your property at this point. These can come in many forms, from title issues resulting from lawsuits, unpaid liens, or court judgments against previous owners.
There are several hurdles to closing on a new home. But they don’t have to become significant setbacks for your transaction. Addressing each issue at a time will help you get a clear picture of what needs to be done. If any obstacles do arise, however, having an experienced real estate agent will help you successfully navigate the process while protecting the interest of all parties involved in the transaction.
