So you are a buyer and you signed an agreement of sale on a home and are in the process of purchasing it, or you are a seller who has signed an agreement and are just waiting for your home to close and get your proceeds — keep in mind that there are a multitude of reasons why you may never get to the closing table.
We’ve written about flood insurance and how a buyer may not be able to close if they had not purchased flood insurance as the Congress had not renewed the flood insurance bill. That has now been renewed until September 30th. But what about other things?
Some home buyers may be shocked to discover they’ve lost their mortgage commitment after making a major purchase prior to closing! That could be a real shock to the seller who is expecting to close, too.
Fannie Mae announced changes to its Selling Guide as part of its Loan Quality Initiative earlier this year. This update requires lenders to determine that all the home buyer’s debts are disclosed on the final loan application. If the borrower takes on more debt before the closing, the lender should update its underwriting. If it fails to do so, it may be required to buy back the mortgage. In response, many lenders are expected to run a second credit check prior to closing.
Any major purchases by a buyer, especially if credit is involved could effect the real estate transaction.
So what else can go wrong? How about homeowner’s insurance? If the property is older – there could be a type of wiring system in the home called Knob and Tube. Many insurance companies will not insure new customers with this type of wiring and one of the requirements of purchase (if bank financing is involved) is to have an insurance policy in place prior to settlement and protecting the lender with a mortgagee clause.
Just because you were able to find the house or the house buyer doesn’t mean that your home is bought or sold! Our Realtors are trained to avoid those problems or address them before they become major problems. You bought a GPS system to help you find your way around town or across unfamiliar territory — enlist the help of one of our Real Estate Professionals to do the same for you in your real estate transaction.