Buying and Selling

What Can Go Wrong at Closing and What to Do About It

What Can Go Wrong at Closing and What to Do About It
 

Closing day is an exciting time for first-time homebuyers, but it can also bring last-minute obstacles ahead of the finish line.

Here are some of the most common causes of closing delays, and what buyers can do to avoid them:

Last-minute changes to loan terms

Planning ahead can reduce the need for making last-minute mortgage changes that could delay your closing.

The type of mortgage you obtain is one of the biggest financial decisions you will make, and you can work with your loan officer to carefully pick the terms that fit your needs. While it is important to weigh the pros and cons of each option before you close, you will avoid costly delays by making these decisions well before closing day. 

Money transfer troubles

You’ve saved diligently for a down payment, but do you have a plan for transferring that money?

“Nine times out of 10, the money needs to be wired to the title company or closing attorney, so buyers need to prepare to initiate that wire the day before closing,” says Kevin Dwyer, a SunTrust Mortgage loan officer based in Atlanta.

Since wiring procedures can vary across banks, be sure to ask your bank about its process well in advance of closing day. If your bank requires three days to complete a transaction, for example, you can plan accordingly to avoid a delay at the eleventh hour.

Document inconsistencies

Tom, Tommy or Thomas? Buyers might go by many names, but choosing one for the purpose of legal documentation can help you avoid a setback at closing.

“Make sure the first, middle and last name on all documents are aligned,” says Fred Kreger, vice president of the National Association of Mortgage Brokers.

The spelling of your name should be consistent on your driver’s license, credit report and any other documents you are asked to sign or present during the mortgage application process.

Credit check curveballs

Homebuyers may be tempted to purchase a new car for their soon-to-be garage or new appliances for their dream kitchen. But once under contract, it’s important to understand that these types of financial decisions can impact your credit history, which is a key component of the mortgage process.

Lenders “recheck credit right before closing, and if a major purchase has been made, that can compromise all of your debt information,” says Sandra O’Connor, regional vice president of the National Association of Realtors. 

If you take on more debt before closing, your debt-to-income ratio will need to be re-evaluated. In other words, it’s best to wait on that new car until after the closing process is complete.

A cloudy title

You’re entitled to a title free of liens, so it’s important to ensure the seller acts ahead of time to clear any that might be outstanding.

The best way to avoid a last-minute surprise? “Ask questions,” Kreger says. “Ask if there are any liens, and if they can be released by the time of closing.”

A title search done before closing can also help disclose any liens, O’Connor says. Sometimes alarm systems, major appliances and fuel storage tanks are long-term purchases that could include a lien on the property. 

Final walk-through discoveries

A new home is an investment, so be sure to verify the one you move into is in the same condition as when you agreed to buy it, less normal wear and tear.

From noticing that the seller stopped caring for the lawn to discovering a missing refrigerator, last-minute findings can result in your closing being rescheduled. But with adequate preparation, you can help prevent a delay.

“Have your first inspection at the outset of the contract,” O’Connor says. “Negotiate repairs, specify they be done by licensed individuals and request receipts.”

If there are major repairs that require specialists, consider scheduling a second inspection a week before closing to verify the repairs were properly completed. Another inspection costs money, but identifying issues before you reach the closing table can pay off in the long run.

While the closing process can bring unforeseen delays, preparation can help minimize them. By keeping these pitfalls on your radar, you can be proactive and enjoy your new home sooner.

Get started today. Whether you’re just getting started or ready to take the next step, SunTrust Mortgage is here to help.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

Related

Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at www.suntrust.com/investmentinfo.

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.