Closing on a home? Here are 3 big mistakes to avoid
In general, a timely closing of the escrow is considered a successful one. Nonetheless, a single mishap can ruin the schedule during escrow and may cost you more money. We will guide you on how to prevent some common problems at home when closing escrow.
1. Not sticking to your closing timeline
In addition to setting the terms of the contract, the purchasing agreement serves mainly as a detailed timeline detailing exactly what needs to happen — and when — to keep the deal moving forward.
As a customer, you need to stick to those deadlines as failure to do so might be considered in breach of contract. If this occurs, the implications could include the annulment of the purchase agreement and the forfeiture to the seller of your earnest deposit of money.
2. Forgetting to follow up
While we are dealing with meeting deadlines, it is important to consider that you are not the only one who follows them. Everyone is responsible for doing their part (and on time), from the home inspector to your mortgage loan officer, to help you meet your contractual obligation. That said, even the most critical deadlines can sometimes slip off the radar — that is why you should not hesitate to follow up.
3. Making big purchases during the escrow period
This is a big one. It is necessary not to make any financial decisions that may affect your credit report after a pre-approval is received. The reason being is getting a mortgage pre-approved is no guarantee it will be funded. After your application is received by the lender, you must go through a process called underwriting, where the bank checks your finances to ensure you can afford your expected mortgage payments.
This means you can stop doing things that have a negative impact on your debt-to-income ratio (such as buying a new car or making a large purchase of furniture using your credit cards) until after the service is done. During this process, you will want to see your finances look as healthy and stable as possible.
During this time, any significant financial maneuvers (including changing jobs) need to be well thought out and adequately documented, because as they say, it’s better to be safe than sorry.
Although the closing stages of escrow finally put you in the home stretch of the overall process, it is not over until it is over. It’s important to remain vigilant about doing your due diligence to ensure your closing is timely, stress-free, and successful.
Please note that this article is not a substitute for a licensed real estate agent’s advice concerning your particular situation. This is for information purposes only and is not intended to be interpreted as advice on financial, tax, legal or insurance matters. It’s still highly recommended for you to reach out to an advisor regarding your own situation, contact us at 401-396-2888. We’re always glad to help!