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A smooth real estate closing is critical, but unexpected issues can cause significant delays. The key to avoiding these problems is proactive monitoring and understanding potential pitfalls well before your scheduled closing date. Based on our experience assessment, the most common closing issues involve document errors, mortgage processing delays, and title complications. By reviewing documents early, maintaining consistent communication with your lender, and understanding the title report, you can significantly increase the odds of an on-time closing.
One of the most frequent causes for delay is errors in the closing paperwork. These can range from simple misspellings of names or incorrect addresses to more serious inaccuracies in the loan amount or missing pages from a document packet. Any error, regardless of size, can halt the process for hours or even days while corrections are made.
The most effective prevention is to preview every document as far in advance as possible. Pay particular attention to your loan documents. By law, you are entitled to receive your Loan Estimate (a form that outlines the key features and costs of your mortgage loan) and your Closing Disclosure (a five-page form providing the final details of your loan) at least three business days before closing. Scrutinize these forms immediately upon receipt. Check the loan amount, down payment, interest rate, and all personal information for accuracy. The sooner you identify a problem, the faster it can be resolved.
In a busy real estate market, lenders can become overwhelmed with applications. Your file, while a top priority for you, may not be at the top of your loan officer's pile. This can lead to last-minute requests for additional documentation, such as copies of a rental agreement or a canceled deposit check, creating a scramble that risks delaying the closing.
To prevent this, establish a clear line of communication early on. Find out exactly what documents the lender needs to complete your file. Then, conduct periodic check-ins via email or phone to confirm they have everything they need. A weekly follow-up is reasonable until your file is confirmed complete. Your real estate agent will likely also be checking in, so coordinate with them. Always ensure your lender is aware of your target closing date. Several days before closing, confirm with your closing agent that they are in communication with the lender and have all necessary documents.
Relying on a bank wire transfer for your down payment and closing costs carries a small but real risk. A technical glitch or timing error could mean the funds do not arrive on time or in the correct amount, jeopardizing the entire closing.
You can avoid this issue entirely by bringing a certified or cashier's check to the closing meeting. Personal checks are typically not accepted for large sums. Alternatively, if you prefer a wire transfer, arrange for the funds to be sent so they arrive at the title company or closing agent’s account a couple of days early. If the exact amount is not yet finalized, transfer more than you anticipate needing; you will receive a refund for any overage after closing.
The title represents legal ownership of the property. A "clouded" or unclear title means there is a claim or lien against it, such as unpaid contractor bills or property taxes from the previous owner. Your lender will require a clear title to issue the loan, and you should insist on one for your own protection.
Shortly after escrow (a neutral third-party account that holds funds and documents until all closing conditions are met) is opened, the title company produces a preliminary title report. Request a copy of this report from your title company or lender as soon as it is available and review it carefully. At closing, you will purchase title insurance, which protects you from any undiscovered claims that arise after you take ownership, but a clear title to begin with is essential.
The final walk-through, conducted just before closing, is your chance to ensure the property is in the agreed-upon condition. Discovering damage, such as a hole in a wall or missing fixtures the seller promised to leave, can create a major problem.
Address any issues immediately upon discovery. Your real estate agent should contact the seller’s agent to resolve the problem. Solutions can include negotiating a credit against your closing costs, meaning the seller pays more to cover the repairs, or having funds from the seller’s proceeds held in escrow until the issues are fixed. The critical point is to resolve these matters before the closing meeting. If a resolution cannot be reached beforehand, you may need to postpone the closing.
To ensure a successful closing, adopt a proactive approach: review documents early, communicate frequently with your lender, use a certified check for your down payment, scrutinize the title report, and address walk-through concerns immediately. While surprises can happen, diligent preparation minimizes their impact and helps you finalize your home purchase on schedule.
