Once an offer has been accepted by a seller, you need to go through the mortgage closing. As long as everything goes right, it will only take about 21-28 days or about a month on average. But, if even one problem arises, it can set the closing date back weeks – maybe even months! Here are some of the things that can stall the mortgage closing process:
1. Expensive purchases for the home
If you’re the buyer, you might want to hold off on making any big purchases for the new home (sofas, beds, dining sets, etc). The lender will pull your credit before the closing date and if you’ve made any big purchases on a credit card, it will show up and reflect as you taking on more debt. The lender may want to change their loan offer.
2. Death of original homeowner
The home might need to go through probate court to authenticate the former owner’s last will and testament if something happens to them. In some states, this could take months or even years!
3. HOA issues
If the former owner has outstanding fees or fines, it could cause issues with the closing. The best bet is to negotiate those costs with the seller and/or pay off the fees.
4. Verification issues
The borrower’s landlord, mortgage company, employer, or source of the down payment might drag on providing necessary verification.
5. Down payment issues
The lender may require the home buyer to put more money down in some instances, which can take some time if the buyer lacks the necessary funds.
6. Lender needs more information
For different circumstances, the lender may ask for additional information to be requested later in the process. If the lender loses documentation, they may also need to request it again from the buyer.
7. Schedule problems
For any party involved in the closing, they may not be able to meet on a previously agreed time.
8. Buyer delays
There are many buyer delays that could stall the closing: if they are self-employed, if they have multiple sources of income, if they are getting a down payment from an “unconventional” source or gift. These could require more documentation.
9. Flood insurance requirement
If living in a flood zone, the buyer might need to acquire flood insurance and complete the benchmark survey which could take up to 3 weeks to process. It then needs to be reviewed by the mortgage underwriter.
10. Appraisal disparities
Before the mortgage is approved, the bank must appraise the home and – if their appraisal is lower than asking price – they may require a negotiation.
11. Title issues
Any tax liens against the property will need to be resolved before the closing can happen.
12. Property damage
If there is damage to the property, the lender may require repairs to be finished prior to the closing.
13. Contract disagreements
Either party may not agree to the requests may in the contract, which means it will need to be changed and rewritten.
If the house is in foreclosure, it could take up to 10 days to get the payoff information from the mortgage company including legal fees.