6. Special Reports

#21, What Can Go Wrong at Closing? REAL ESTATE REPORT #21: Realtors, Buyers, Sellers, Property, Bankers/Brokers? What Can Go Wrong at Closing? W. M. "Bill" Slaughter, REALTOR, ABR, GRI, e-PRO, RECS, SRES Have you ever been told by a Loan Officer that your Mortgage Loan was pre-approved, followed up later and asked about the status of your loan and heard, "No problem". Then, three days before closing, you call the Loan Officer, ask when loan docs will be delivered to title, and hear the following, "Well there is a slight problem...." Sometimes the cause of this is an inexperienced Loan Officer, or the Buyer information is not accurate, or the Realtor 'drops the ball'. There are all kinds of things that can go wrong, some we can predict and some we cannot. When hiring a TRUE professional, whether it is an Attorney, Doctor, Financial Planner, REALTOR, Loan Officer, etc. QUALITY comes at a price. We usually get what we pay for. Preparing a pre-qualification is the easy part, anyone with a minimum amount of experience can accomplish this. THIS IS NOT THE FINAL APPROVAL! Keep in mind, UNDERSTANDING all the other parts of the puzzle and putting them together is what your REALTOR and BANKER must professionally accomplish for you. You may think because you have decent credit you should have no problem getting a loan. The majority of the time you are correct. However, we find circumstances that must be addressed in nearly every transaction. Attached is a list of just some of the things which can go wrong on any mortgage transaction. 'Your Mortgage Team' is required to make sure the problems are corrected and bring the transaction to a successful close. Just Some Of The Things That Could Go Wrong. Problems with the Property 1. Termite report reveals infestation and/or substantial damage, but the Seller will not pay for it. 2. The Home Inspector says the foundation is cracked and the roof leaks. 3. The home is uninsurable for Homeowners Insurance. 4. A portion of the home or fence is on the neighbors lot. 5. The room addition does not have a permit and does not meet code. 6. Seller took the well sample, and signed the Water Test Sheet. 7. The appraisal comes in too low to save the transaction. 8. The VA Appraiser is not familiar with the market in which your new home is located. 9. The investor requires a second opinion or a appraisal review. 10. The Appraisers license has expired. Problems Caused by the Buyer 1. The Buyer is not completely truthful during the application and hopes no one will find out about NSF checks, the REPO, or the lack of CHILD SUPPORT. 2. The Borrower loses his job one week before closing. 3. The income verification is lower than what the Buyer put on the application. 4. The Underwriter does not count the income from the second job or overtime. 5. After the application, the Buyer assumes they are qualified and then goes to Sears and buys appliances and furniture with their credit card. 6. Buyer cannot find the Bankruptcy or Divorce papers. 7. Due to credit or previous claims, the Buyer is uninsurable for Hazard Insurance. 8. Buyer changes job from salary to commission. 9. Buyers tax returns do not match what was sent to IRS. 10. The Buyers social security number belongs to someone that died in 1921! 11. VA Buyer cannot find his DD214. 12. Buyer comes up short of cash or changes their mind about the house. 13. Buyer does not lock-in during the ten-day inspection period, the Bond Market goes up and the Buyer cannot qualify at the current interest rate. Problems Caused by the Seller 1. The Seller gets a better offer and finds out the appraisal was not paid for by the fifth day after acceptance and voids the Buyer's Contract. 2. Final inspection does not pass and Seller refuses to pay for damage or repairs. 3. Seller refuses to let appraiser or inspectors in the home. 4. Seller takes property that should convey with the home and is listed on the contract. 5. Seller fails to vacate the property at time of possession because their new home is not ready for occupancy. 6. Seller misrepresents information about the home or the neighborhood. 7. Seller did not know about the prepayment penalty and now does not have enough to pay off the mortgage and the closing cost. 8. The Seller refuses to sign the papers. This is not a total list, but it should give you a good idea of some of the problems that you might face before or during the Close of Escrow on your New Home.