With rising prices and stricter controls on mortgages, housing affordability is getting more challenging. And once you finally obtain funding (after squeezing out every last drop of your savings for a down payment), it’s still not a done deal till the closing date. A number of unexpected issues can come up that may kill or delay a deal.
Here’s a checklist that will help you get to the finish line successfully:
- Don’t start spending big – Now that you’ve secured funding for your house, you might think that it’s time to start buying furniture for your new home. Try not to spend large sums of money, whether cash or credit, as it will affect your standing with the lender. Your financial status will be checked a few days prior to closing and any major changes from your initial evaluation will need to be reassessed to ensure you still have the ability to pay off your mortgage.
- Be wary of changing jobs – While it might seem like a great idea to take a higher paying job before your closing date, it may affect your lender’s decision to close as scheduled. They may want a few months of pay stubs from your new position to prove that you have stable income. While it may not be a deal breaker for your lender, it may delay the closing date.
- Provide documents on time – Your closing date can be anywhere from 30-90 days after signing the agreement of purchase and sale. You do have some time to provide your mortgage broker and lawyer with the documents that they require, but don’t delay! The sooner you provide all the paperwork necessary, the sooner your team will be able to handle any unexpected findings or issues that may arise.
- Try not to skip the home inspection – With the hot market and multiple offer scenarios nowadays, a lot of homes are being sold without conditions. While presenting a clean offer may win you the home of your dreams, it can also end up costing you more than you expected. When you’re mortgaged to the max, you can’t afford costly surprises like leaks or repairs that you come across when you finally move in.
- Keep extra funds on hand – Buyers often put as much money as they can into their down payment. However, you should always keep extra money on hand to prepare for closing costs like land transfer fees, legal fees and any bills the sellers may have prepaid, such as property taxes or utilities. You may also need to put down a larger down payment if the lender appraisal values your house at a significantly lower price than you paid for it.
- Don’t forget the title insurance – Make sure you’re protected by asking your lawyer to purchase title insurance for you. It not only allows you to close fast even in the absence of a survey and provides gap coverage, but it also protects you from paying any liens or debts the previous owners left behind.
Have you encountered unexpected issues before closing? Share your stories in the comment section below!