Realtors can help their Buyers by reminding them verbally and in writing of what they can expect during the period from contract acceptance to a successful closing. I’ve seen recent instances where Buyers have:
- Failed to lock in their interest rate… First time Homebuyers in particular, may “assume” that the rate that was quoted when they received Pre-Approval and were given a Good Faith Estimate, that nothing else needed to be done. The Buyer sadly learned otherwise when the interest rate during the time the GFE was prepared had risen to new levels. Unfortunately, even a small percentage increase can and did result in loan denial because said Buyer was very “close” to begin with, as far as debt ratios, ect. The Buyer’s previous loan “approval” was subsequently denied and the contract terminated.
- Failed to resist the temptation to charge Monies on their credit card purchases prior to closings…In the exuberance of buying their next home, some Buyers are forgetting that their credit will be pulled as late as the morning of the closing. If things were “close”, as in the example above, some are “crushed” when that simple “mistake” causes the Lender to deny their loan.
- Assumed the Lender would continue processing their loan even though their Lender requested them (the Buyer) to pay for the cost of the Appraisal upfront…Many Lenders will not incur the risk of their having to pay for an Appraisal if a closing never happens. It’s understandable for Lender(s) to require the borrow to pay that fee upfront, imo, but sometimes it is not made clear that the appraisal may not even be ordered until the Buyer pays said monies upfront. A Buyer was recently stunned that he let 3 weeks go by, not thinking that the oversight might (and did) result in a delayed closing. That mistake effectively caused the Buyer to incur additional and unnecessary expenses for storage, temporary living, ect., all of which could have been prevented, had he placed the correct priority on this matter earlier in the process. I also have seen too many instances where parties to a contract “assume” that a contract extension will be freely given. Wrong, a Seller may have previously accepted a back up contract and may be delighted to see the first contract fall through because the back up has terms even more favorable to the Seller, for example.
Hope these tips will enable you to avoid some common mistakes that cause emotional roller coaster rides and/or additional economic burdens, while ensuring that you will have a successful closing!