Buying a home is an exciting time, especially if it is a first-time venture. Choosing the house is only the first step in what can become a very stressful process. As the time to close draws closer, it helps to know how these three issues may put a wrench in the process.
- Problems With the Mortgage
Most buyers need a loan to purchase a house. This mortgage is not always easy to get. When a buyer engages with a lender, there are specific qualifications that must be fulfilled. One of the biggest is the debt to income ratio of the buyer must be at a rate that the lender deems safe. Since the buyer is asking for a loan of a substantial amount of money, the lender wants to make sure they will be able to pay it. Throughout the contract inspection period, the mortgage company will ask for updated pay stubs, bank account balances and credit card statements. If something comes up, either with the home or the buyer’s financial status, the lender could stall or stop the entire closing process.
- The House Appraises Low
When the lender agrees to the loan, they do so predicated on its value. The mortgage company wants confirmation that the house is worth as much as the purchase price, since banks don’t give more than the value. When the appraisal comes in much lower than the sale price, it can cause a problem that either means the seller has to drop the price of the home, or the buyer has to come up with the extra cash to fill the gap. If neither scenario happens, the sale may be dead.
- There Are Issues With the Title Report
Every piece of property, whether it has a home on it or not, has a history. This becomes crucial before a closing because the lender wants to ensure no one else can claim any portion of the property as theirs. A title search may reveal something, like an easement, that many encumber all or part of the property. The most common easements are for utilities. These bounded out areas of the property allow utility companies access to their equipment. An easement means that the particular piece of property encumbered by it cannot be changed substantially. While the buyer will still own the property and usually be responsible for maintenance of the easement area, they cannot install a fence or do anything to obstruct it.
If any problems are encountered before closing regarding an easement or other title defect, find a real estate lawyer to help. A check of easement law may be all that is needed to get it resolved.