Why Is Your Closing Delayed?
In the days leading up to closing, you could be faced with several obstacles that could potentially delay closing. In most instances, delays can be avoided by keeping up with the progress of your paperwork. To help keep your closing on schedule, here are some of the most common reasons they are delays and what you can do to avoid it.
Failure to Allow Time for Closing
When you sign the purchase contract for the home you are buying, you and the seller have to agree upon a date to have the transaction complete. Unfortunately, some people fail to set a realistic date, which can result in delays. Depending on the terms of your contract, the seller might have the option to cancel the sale and hold onto your earnest money deposit if he or she is not at fault for the delay.
To avoid potentially losing your deposit and to close on time, it is important to set a realistic date. When selecting a date, you have to factor in the processing of your loan application by the lender, the home inspection, and other contingencies that are in place. Work with your real estate agent and the lender to select a date that works best for you.
The Appraisal Is Low
If the appraisal for the home is too low, it is unlikely that your lender will fund the financing of the home. The home is an investment for both you and the lender. A low appraisal is a high-risk investment that the lender is probably not willing to take.
A low appraisal can be handled several ways. One option is to ask for another appraisal. You can also ask the seller to lower his or her listing price to the appraised value. Whether or not the seller does is entirely up to him or her. If you have the funds available, you can pay the difference between the appraised value and listing price.
Insurance Companies Are Unwilling to Insure the Home
During closing, you have to present evidence of homeowners insurance. If you do not have it, your lender can delay the closing. In some instances, finding coverage can be challenging.
For instance, if a major claim was previously made on the home, insurance companies might be shy about offering protection now. If the home fails the inspection for a major issue and it is not repaired, the insurance company might not be as willing to overlook it as you.
Work with your lender to determine what options are available to you. Your lender could require that the problem uncovered during inspection be repaired before moving ahead with the closing.
There are many other issues that could arise that would delay your closing. Consult with a lender (such as one from Premium Mortgage Corp) to find out what you can prevent those problems.