It’s Closing Day – Will It Be Champaign or Tylenol?
Closing day is finally here! You are one final step away from becoming a home owner for the first time. You are prepared to celebrate; to get the keys and maybe carry your bride across the threshold; but, wait, there are still things that can still go wrong. I’ll go over a few below, but here is an article that also covers some of the issues that can come up on closing day.
Although you’ve been doing things, providing documentation and getting things lined up for this day for 30 days or more, there are things that can pop up in the final moments that can queer the whole deal. I already mentioned the final walk-through. Many buyers delay that until the day of closing and do it while they are on their way to closing. That is a terrible time to find out that the Sellers took something that is supposed to come with the house or damaged the house on their way out. At that point you have very few ways to fix the issues short of refusing to close and demanding that the seller replace the items or repair the damage. Things can get very tense at the closing over unresolved issues that arise from the final walk-through. You will need to decide whether what you found in the final walk-through is a show stopper of not and what you will ask of the Sellers.
As unbelievable as it may seem to you, after all of this time, the mortgage company and/or the title company may have incorrect documents at the closing. The mistakes can include simple but critical things, like having your name spelled wrong or having the wrong property address. The amounts of money that are on the final closing documents may also be different from what you were expecting. With the current Closing Disclosure rules you should have been given a chance to review the closing documents,
especially the HUD documents that detail all of the charges and closing
costs and the final amount due from you. Unfortunately, that does not always occur and there could still be mistakes on the final documents that you are expected to sign.
Something could have changed that impacts your creditworthiness and the mortgage company pulls back from their mortgage commit. Keep in mind that the mortgage company underwriter will make a final check of your credit and employment the day before closing and that you will be signing an affidavit that states that nothing material has changed since you applied for the mortgage. You can’t hide things like getting laid off at work or making a major purchase on your credit cards. Trying to do so is considered to be fraud and the consequences are something that you don’t want to explore.
Maybe you discover that you didn’t have enough money available to bring to closing. Most buyers wait until the day before or the day of closing to go to their bank to get a check for the amount that they are supposed to bring to the closing. Sometimes they get a rude shock when they find that they don’t have enough there in available funds to
cover the check. A common mistake is people underestimating the time that it takes to get their money out of a non-bank source, such as their 401K or stocks that they are selling to get the money. You don’t want to find out the day before closing that it takes 5 business days for your stock sale to close and the money to be credited to your brokerage account.
Plan well ahead for getting access to the funds that you need for closing. If the amount that you need to bring exceeds $20,000 most title companies will require that the funds be “wired in”. That means that you’ll need to get wiring instructions from the title company and work with your bank to make the wire transfer happen when you need it for closing. Here’s a link to a good article on the how’s and why’s of wiring money into the closing. Beware with wiring money that the bad guys have developed very sneaky way to try to steal your money. Here’s an article on the wire fraud schemes that they might try to use on you.
Last minute title issues. Having waited for 30 days to get to this point; there could be last minute title issues that threaten to delay or derail the closing. Sometimes these are issues that have been out there all along, but which didn’t cause a reaction until the final documents were reviewed. These can include things like the fact that some third party may own the mineral rights and have the right to drill on the property if they so desire. It could include a cloud on the title that could not be resolved, such as the lack of a recorded death certificate for a previous owner or the lack of a recorded release from a prior mortgage or lien (perhaps a tax lien). It could even be the lack of a paid receipt for work that you required the seller to do as the result of the inspection. The title company wants to see all of those receipts to make sure that no one has a claim that they could lodge against the property.
Most of the time these things do not happen and closing goes as expected, but that is usually because the issues were discovered and resolved well ahead of the closing date. It is the possibility that some of these things could happen that causes the real estate agents involved to caution their clients against getting too committed to things like the move before the closing is complete. What happens if any of these things go wrong; or, heaven forbid, the Seller drops dead on his way to the closing; and your stuff is in a moving truck that is on its way to the new house or the Seller’s moving van has just pulled way with his stuff in it. It can happen, It has happened. It is not pretty when it does happen. Use caution and common sense when planning for your occupancy after the closing.
Let’s end on a positive note. Most closings go on without any of the issues that were discussed here. Most of the time the mortgage companies and title companies discover any issues early in the process and, together with your Realtor®, work to get them resolved. Having a good Realtor guiding you through the process will also prevent the common buyer mistakes. So, get the Champaign ready. It’s going to be a great closing day and you are about to become a home owner. Now it’s time for the Champaign.
Norm Werner is a Realtor® working for Real Estate One in Milford, Michigan. Norms helps people buy and sell houses in Southeastern
Michigan, in Oakland, Livingston and Macomb Counties You can contact Norm about finding a new home or about getting a Market Analysis for your current home by texting or calling him at 248-763-2497 or click here to go to his web site and fill out Help Form for buyers and sellers.
To see all of the post that have been made to this series of posts go to the post series index.
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