Buying a home is a big investment and it tends to be a big undertaking as well. As a legal transaction, there are a number of issues that might crop up between the time you make an offer on a house, get it accepted and have it close. The following are four top issues you might face when buying a house.
Financing can fall apart for a number of reasons, but many of them are easily preventable. One example is credit scores changing between the loan pre-approval and the actual closing. One common way that this happens is when buyers take on additional credit between approval and closing. New car purchases and new furniture or other items for the new house are the most common. To be safe, you should completely avoid any new credit activity until after your house has closed. Another example is when a debt to income ratio is compromised by the buyer not disclosing an ongoing monetary obligation. The most common reason for this is child support. You should always disclose all payments, avoid taking on new debt and avoid changing your employment situation between approval and closing.
Home inspections also tend to pose a problem when negative results are uncovered. It becomes a question of whether the seller will make the repairs to the buyer’s satisfaction before closing, whether they will cut the selling price or whether they will use escrow funds. In some cases, the seller may say that they won’t make any repairs or reduce the price, which leaves the buyer to decide whether the house is still a good deal. The other issue is that sometimes inspectors make problems seem much worse than they are, which can easily kill a deal.
Another problem that often crops up is when an appraisal comes back for much less than what the contract price. When that happens, the lender may refuse to lend the money on the agreed-upon price, which leaves the buyer to either come up with the cash difference or the seller to lower the price to meet what the appraisal indicated.
The final hurdle to buying a house can be title issues or liens. A good title company will look for these issues early in the process to keep surprises from happening at the end. Some common issues include unpaid property taxes, unpaid contractor bills, or if the property is the subject of a lawsuit. In order to prevent an unclear title from complicating a closing, the title company should complete a preliminary title report to identify any issues. You should also buy title insurance at closing to protect against any missed problems.