You may have found the ideal home, negotiated a good purchase price and signed a contract with the seller-but that is only part of the transaction. Many things can still trip you up on your way to closing.
Important: The pitfalls are avoidable if you know what to watch out for.
Failing to stay on top of your key advisors. No news is not necessarily good news. Things can fall between the cracks if you’re not careful.
Best weapons: Persistence and relentless follow-up.
Remember… the mortgage lender, lawyer, insurance agent and the other professionals “helping” you through this process are extraordinarily busy-and not universally competent. Always ask them to take care of little details “now, by this afternoon if at all possible.” Let them know that you don’t want to be surprised by any last minute glitches like erroneous liens such as, someone with your name who has dozens of unpaid parking tickets.
These days, lenders are so swamped with first mortgages and refinancing applications that they cannot possibly give each one the timely attention it deserves. So, while your application is pending, you should call the lender two or three times a week to see what your status is. This will speed up the process.
Your attorney can cause a delay by not ordering a title search or survey at the appropriate time. So, call your attorney as a polite reminder.. and then call again.
Being penny-wise and pound-foolish. Don’t get so emotional about a small problem that you end up walking away from a home you really want. Maybe the seller is being a total jerk about a minor issue, but if everything else is right so what?
Keep your main objective in focus at all times.
The seller promised to leave an old air conditioner in the house, but you notice during the final walk-through inspection that it’s not there. This problem is not a deal-breaker. Yes, you can try to negotiate compensation at the closing, but don’t get hung up on the issue. The home itself-and your emotional well being matter much more.
Hold your ground on some things, however. If, for instance, the seller’s attorney demands that you pay for his/her travel time to the closing, don’t bite. That is the seller’s responsibility.
Forgetting to massage the seller. You shouldn’t become the seller’s buddy (that may inhibit you from getting the best deal you can), but the nicer your are the more you are likely to get.
Keep the seller informed about how things are progressing at your end. The more up front you are, the more likely you are to get what you ultimately want.
A cooperative seller can tell you important things about the neighbors and local trades people. Being considerate might also help you get a better deal on any household items the seller might be willing to unload.
Underestimating closing costs. Yes, the cost of closing on a new home can be shocking, but your shock should come well before, not at, closing.
Your lender and attorney are responsible for telling you exactly what the closing will cost well before the actual event. Costs will vary from state to state and will fluctuate based on the number of points you pay, but the rule of thumb is that closing costs will be about 5% to 7% of the mortgage loan amount. Helpful: Insist on a complete, itemized list of all closing costs as early in the process as possible.
Skipping the “walk through” inspection before closing. This is your last chance to get what you’re supposed to get. Take advantage of it. Within 24 hours of the closing, inspect the home to see if it is broom-clean and in the condition you bargained for. Take the realtor, with you as a witness to verify a problem.
(Bring Polaroid camera, to improve your negotiating posture if there are issues you need to raise before or at the closing.)
If any large objects remain in the home, it’s smart to have your lawyer request that the seller put some money in escrow until he move is completed. A door, window or floor could be damaged during the seller’s move-and that is not your responsibility
Waiting to line up the remodeling crew. Contact architects, contractors and painters before the closing so your new home can look the way you want it as soon as possible. Make sure that your contract with the seller includes language stating that such people can examine the home at mutually convenient times.
Don’t pay any contractor a nickel until you have a mortgage commitment in writing, and even then try to finesse the issue until the closing.
Blindly trusting in the seller’s good faith and in good weather. Have your contract state that the seller will maintain the grounds until closing and clear the sidewalks and driveway in the event of a snowstorm or other “acts of God.”
Forgetting the tiny details of moving. Remember to reroute your mail, register to vote, change your auto insurance (if necessary), send your child’s school records to his/her new school and arrange for all utilities to be set up in advance.
Have the seller tell you who has been servicing the home’s various systems-electrical, plumbing, etc. If you hire them, they can provide a point of reference when anything goes wrong.
Showing up unprepared for the closing. Under no circumstances should you forget to bring the following:
The original of the home insurance policy and a paid home insurance receipt
Certified checks to pay fees and expenses related to the closing
Your spouse or anyone else whose name will be on the new mortgage
Typically, certified checks will be required for the seller and/or an escrow account or attorney trust account. Financial firms such as Merrill Lynch and Dreyfus-and not just banks-now issue certified checks.
If you are thinking of bringing a lot of cash to the closing in the hope that such a deal will elude the scrutiny of the IRS, don’t bother. All such payments have to be reported.