Not Closing On a Property

Not Closing Escrow

You've found the perfect house and put in an offer. Now is not the time to hope everything goes well. You and your real estate agent should have everything lined up by now. Make sure you've been preapproved, not prequalified, before you put in the offer. And then don't do anything to endanger your eligibility. The following are some reasons people fail to close on their dream homes:

They Weren't Really Approved After All

The people were so excited to look at homes they forgot to talk to a loan officer. A prequalification goes quickly, with some questions over the phone. The loan officer makes a best guess given the information. But that's not the same thing as a preapproval. That is where the lender pulls a credit report and verifies the information. Things to look out for are previous bankruptcies, late payments, wage garnishments and so forth.

Now is Not the Time To Use the Credit Cards

Assuming you have been prequalified, don't rock the boat. Now is not the time to buy a new car, new furniture or new boat. Now is not the time to run up your credit cards or apply for new ones, either. Don't even pay off a bill early without talking to your lender. The lender will pull another credit report before closing and if your credit score has changed, you could be out of a loan.

The House Just Isn't Worth It

Eager buyers, especially those in a bidding war, may win to find the house doesn't appraise for the price they agreed to pay. In this case, if the contract has the right wording in it, the buyers can get out of it. If not, they will have to come up with the difference.

In the case of a flipped house, where the owner bought it and rehabbed it, some banks won't finance without two independent appraisals. And if the appraisals don't agree, the bank will refuse to make a loan.

If the buyer is going after a condo, there are strict guidelines on the building itself before a loan is issued. The building has to be FHA approved if you are trying out for an FHA loan. Half of the units must be occupied by owners and not rentals. No litigation can be in process against the HOA and less than 15% of the units can be late on their payments.

Do It Right and There Will Be No Surprises

Take your time and don't just jump in. Talk to a loan officer. If you don't have one in mind, talk to your Realtor. Get preapproved and then watch your step. When you find a home, ask the Realtor to do a CMA on it to make sure it's worth what is being asked. Then you can close in peace and enjoy your new home.