Related topics
Robert Burns, the Scottish poet who commented that "the best laid schemes of mice and men" often go wrong, could have been a real estate agent. No matter how carefully you plan, things can happen that delay - or even prevent - a closing. Problems may arise, for example, if the mortgage underwriter requires clarification of or extra documentation for something in your loan application. It can take time to gather the information, submit it to the underwriter, and wait for a response. Delays like this can be harrowing. Submit the requested information and try not to get too nervous. Remember that, even though lenders want to close files as efficiently and quickly as circumstances allow, delays do happen.
Your mortgage broker or loan officer can give you the reason for a delay, but here are some common causes:
- Even if you're preapproved for a loan, the lender will check your credit report again. Any new debt or credit problems that appear on your report can slow or preclude final approval.
- Mistakes in your credit report can also cause delays - that's why it's a good idea to find and correct them before you apply for a mortgage. A mistake can still pop up in your updated report, but you've taken care of the old ones.
- The lender may ask for updated bank statements or other financial documents.
- Your job situation changes. Lenders look for stable employment. If you change your job, they may want to look more closely at your employment history and current job status.
- The lender's appraisal comes in low.
- The mortgage underwriter may want a second appraisal to confirm the first. If the second-look appraisal is lower than the first one, the underwriter may refuse the loan.
- The title search turns up a defect. The seller will have to clear it before you can close.
- Even if the title search comes up clear, lenders will check it again before closing. Any interim liens or judgments on the home's title can delay or prevent the sale.
- You or the seller gets married or divorced. A change in marital status can complicate everything from your loan application to the way you elect to hold title to the house to whether the seller still has the right to sell the home.
- The seller fails to make repairs. You may (and should, actually) decide to delay the closing until the seller makes agreed-upon repairs to your satisfaction.
- The seller requests to stay in the house after the closing. Imagine the seller comes to you a few days before closing and says, "I know we're closing on Thursday, but the moving company can't come until next Monday. You don't mind if I stay in the house through the weekend, do you?" If you don't want the seller living in the house after it's yours, you may end up delaying the closing until the seller moves out.
- You fail to supply complete insurance information. The bank will insist that you have all the required policies in hand before loaning you any money.
- Your mortgage preapproval commitment has expired - this may mean you have to apply for a mortgage starting from square one again.
If an event delays your closing, keep an eye on any deadlines in your purchase agreement and get an extension, signed by you and the seller. Also, check the expiration date in the bank's mortgage commitment letter. A delay in closing might void your locked-in mortgage rate. In that case, contact your mortgage broker or loan officer.
Because delays happen, it's a good idea to give yourself a few days' breathing room between the closing and the day you plan to move in. If you schedule things too tightly, you may have to reschedule the move or stay in a hotel for a few days.
