Buying a home is definitely an exciting undertaking, but it can also be overwhelming and more than a little nerve-wracking. On top of that, a lot of things can go wrong in the process, whether owing to agent incompetence or negligence or mere inadvertence. And in today’s real estate market, where supply falls short of demand, it’s not all that uncommon for something to occur (or be omitted) that can sabotage a home purchase. Buyers first have to secure financing, get past the inspection and appraisal, and then close without a hitch – a complex process that can have numerous twists and turns. So to help prepare you for what lies ahead, we offer these 6 things that can go wrong during your home purchase in Metro Detroit Michigan.
1. Mortgage Difficulties
Your home purchase in Metro Detroit Michigan depends primarily, of course, on your securing financing. And much can go wrong at this stage to forestall your home purchase.
Real estate professionals warn: “Even if the buyer is pre-approved for a loan, problems can arise at the last minute. If the borrower loses a job, gets divorced, makes a major purchase, or experiences any change in circumstances that could alter the ability to repay a loan, the lender could change the terms of the loan (or even deny it). Should the terms change, and the purchaser not agree to them, new financing would have to be found, resulting in a delay.”
And your lender could cause a hold-up too. If, for example, you’ve been approved for financing, but processing of the loan package hasn’t been completed, this will undoubtedly result in a delay.
2. Low Appraisal
Another thing that can go wrong during your home purchase in Metro Detroit Michigan an appraisal that comes in too low. In almost all cases, lenders will require an appraisal of the home in question. In order to protect their investment, your lender will have to make sure the property market value is at least equal to the price you and the seller have agreed on. But sometimes the appraisal arrives at a valuation lower than that selling price.
When that happens, you have a few (not very pleasant) options. You can make up the difference out of pocket, find additional financing, get another appraisal, or back out of the deal entirely. Keep in mind, though, that to back out and not lose your earnest money, requires an appraisal contingency in the sales contract. (To find out about structuring the best sales contract, contact your local agent at 248-330-4421.)
3. Insurance Problems
Your home purchase in Metro Detroit Michigan can also be derailed by insurance problems. Real estate pros advise that you find out early whether the home is located in a high-risk area because “a lender may require the buyer to pay for costly high-risk insurance to protect the asset from disasters such floods or earthquakes.” You may be unable to get homeowners/property insurance altogether if “the home is in disrepair or presents a history of claims.” And if you can’t get insurance, you can’t get a mortgage loan.
4. Inspection Issues
In addition, inspection issues can be obstacles to your home purchase in Metro Detroit Michigan. These issues include infestations of pests such as termites that will stall your mortgage till the problem is rectified. The inspection may also reveal that repairs are needed – which will result in a similar outcome. If the home’s integrity has been compromised by something like a damaged roof, such repairs will have to be made before you can close (unless you can negotiate a drastically reduced price.)
5. Last-Minute Delays
And then there is any number of last-minute delays that can affect your home purchase in Metro Detroit Michigan. Such delays are typically caused by a lien on the property discovered during the title search. If there are any liens, the sale can’t be completed, and you can’t close until the liens are removed. Another typical last-minute delay is one that results from damage or problems discovered during the final walk-through after the seller has moved out. Often, these problems weren’t discovered during the inspection because they were hidden by the seller’s furniture or other belongings.
6. Missed Steps
A final thing that can go wrong during your home purchase in Metro Detroit Michigan is that you, the buyer, aren’t as prepared as you should be and wind up missing some steps. Most of the time this takes the form of missing documents at closing, for example, a copy of the homeowner’s insurance policy, certified closing funds, photo ID, or proof of insurance payment. So don’t get to the finish line and fall in this way. A good real estate agent can help you prepare and help you avoid encountering any of these things that can go wrong. Find out how our agents can assist you.