When it comes to the home-buying process, the time period between finding your home and the closing can be filled with both anticipation and anxiety. Commonly, home-buyers will be participating in a number of important events during this time, and the potential for snags to occur can be high. Read on to find out about some of these issues and how to ensure that you end up closing on time.
Major Tasks to Accomplish
You can expect to be busy in the weeks before you close on your home. Here are just a few tasks that need to be accomplished before the closing can proceed:
- Apply for financing and see your loan through the underwriting process.
- Hire a professional appraiser to value the home.
- Price, locate, and buy a homeowners' insurance policy.
- Hire a professional home inspector.
While taking care of these tasks is important, it's also vital that you don't make the below mistakes that mostly revolve around financial matters.
Most people take the vital step of having their financing pre-approved before they even attend their first open house. Unfortunately, having a pre-approval in hand is not a guarantee of getting a final approval for the mortgage loan you need. It's very important to understand that your credit situation will be under constant scrutiny during the time before the closing. Once your credit is approved, you must continue to monitor your actions carefully right on up to the moment you are handed the keys to your new home. Follow these tips to ensure that you avoid ruining your chances for a home loan.
- Pay bills on time, every time.
- Never apply for more credit either by asking for a credit line increase or adding a new obligation.
- Never resign from your job (even if you have a new job lined up).
- Never take a large sum of money (try to stay under $500 in withdrawals) from your checking or savings account unless it is to pay a recurring bill, taxes, or other obligations.
Expiration of the Interest Rate
When you apply for your home loan, it comes with a locked-in interest rate. In most cases, the rate expires after several months. For example, some rates are good for about 90 days. If your closing gets delayed, you might have problems with your financing if the rate rises in the meantime. Your interest rate is just one of several factors that affect the affordability of your home and your loan approval. As the expiration date of your loan draws near and the closing looks like it might be delayed, take the following action:
- Speak with your real estate agent about resolving issues with the closing.
- Speak with your loan officer about the impact a rate expiration might have on your ability to be approved for a loan.
- Ensure that repairs and other purchase contingencies have been completed and resolved.
- Speak with the title insurance company to address problems with the title search and insurance.
In some cases, a closing delay won't affect your financing, but it pays to be aware of the potential for problems and to address them head-on. To learn more about dealing with your closing financial issues, speak to your mortgage lender.