Don’t Delay Your Closing with These Common Mistakes

Closings get delayed more frequently than many people realize. One missed detail or one unanswered email can cause a closing to be postponed for a matter of days or even weeks. Fortunately, most issues are avoidable. So if you’re pursuing a home purchase, make sure you stay on top of things and avoid these common mistakes.

Failing to get paperwork to the lender

Even if a buyer is pre-approved and receives their mortgage commitment, lenders are going to, at the very least, review their credit and bank statements one final time a few days before closing. That review is not the reason a closing may be delayed, but the additional documents needed could cause an issue if things aren’t turned around quickly.

REALTOR® Sue Dickinson with EXIT Realty Select Partners says sometimes buyers get defensive or concerned when lenders ask for additional information or explanations, but she stresses that this questioning is not about distrust.

“Your lender needs to satisfy the underwriter,” she said. “And the underwriter has to make sure that when they close your loan they can sell it on the secondary market, so they have to check all the boxes. Remember, your lender is on your side. They don’t get paid until the deal closes, so they want to keep things moving as much as you do. The quicker you get your lender everything they need, the smoother the process will go.”

Not having professionals lined up

Today’s market is a fast-paced one, and Dickinson says as soon as she takes buyers out to look at homes, she encourages them to think about who they want to conduct the inspection and who they’re going to use for homeowners insurance.

“Have your team assembled ahead of time,” she said. “‘Haste makes waste’ is a popular saying for a reason. When you make decisions hurriedly it can lead to problems and stress. You’re purchasing a home — this isn’t a small investment — so get referrals from family and friends, do your research, and select professionals you are comfortable with and who will work to get things done in a timely manner.”

Not working with a local lender

Over the years, online mortgage companies have become an increasingly significant force in the home loan industry, but most REALTORS® will tell you that using an experienced, local lender is the key to keeping a closing on track.

“A strong relationship between your REALTOR® and mortgage provider is so important, and that relationship is much easier to maintain when the lender is local and accessible,” said Dickinson. “And good communication is critical in this process. Not only does the buyer need to be responsive and get things turned around quickly for the lender, but you also want a lender you can immediately reach when you have questions or concerns.”

Changing your job

Before a lender approves a loan, they’ll verify that your employment status hasn’t changed since you’ve been preapproved. Even the slightest change can be a red flag for lenders. Depending on the type of loan you have, there may be specific requirements for employment verification.

If you are switching companies, but maintaining the same career and level of pay, you probably won’t have an issue. However, if you change careers or move from salary to commission, you will most likely have to wait a while before obtaining a loan. To avoid potential hold-ups, speak to your lender before making any employment changes.

Opening up new credit

As previously mentioned, shortly before closing your lender will run a credit check to make sure there are no new inquiries. If you’ve recently cosigned on a loan or opened up a new credit card it can potentially delay your closing.

“It’s not uncommon for an excited homebuyer to open up a retail credit card in order to purchase new furniture, but if that pushes your debt-to-income ratio past the limit, it may not just delay things...it could derail the entire transaction,” said Dickinson.

Most lenders advise that buyers not use credit cards or apply for any new credit until after closing. Of course, there may be issues that are unavoidable. For instance, if your car breaks down, leaving you with no option other than to take out an auto loan, contact your lender immediately to determine how it will impact your closing.

Throughout the process, you also need to maintain your credit score. Continue to pay your bills on time, and if you’re concerned a creditor will report negative activity on your report prior to closing, do everything possible to resolve the situation.

And you’ll also need to avoid any undocumented transactions in your bank account. A large cash deposit can be a big red flag unless you’re able to clearly document where the funds came from. The bottom line is once you’ve been pre-approved, try to keep your finances as stable as possible until you reach the closing table.

For a list of local REALTORS® and lenders who can guide you through your next real estate transaction, visit the Greater Lansing Association of REALTORS® website at www.lansing-realestate.com.