March 22, 2022
Getting to your closing day can be challenging. There are fees and expenses to pay for, credit checks to submit to, negotiations with the seller, and more. And on top of all those details, there are issues that could slow down your home loan, and may in some cases even affect your closing day.
Don’t assume that such issues are always the borrower or seller’s fault. There are many reasons why your closing day could be delayed or otherwise affected by circumstances.
What Can Delay Closing Day?
Many issues can affect your ability to close the loan. For example, what if the appraisal comes back with corrections or with a value that is lower than the asking price of the home? Those things may or may not require a rethink of the calendar day you are set to close.
Some issues with a home may not “pass” an FHA appraisal, and in such cases, if corrections cannot be made the loan may stop right there.
But corrections are an option that may also delay your closing day. That’s depending on whether you need a compliance inspection or not. Another set of issues that could affect your closing date? Incomplete or inaccurate information submitted as part of your application.
If you don’t include all information or provide required details such as the sources of your down payment, you may find the closing date can’t proceed as originally scheduled until those issues are sorted out.
Other Closing Day Delays: Credit Issues
It’s a mistake to assume that once your lender has run your credit as part of your FHA home loan application your credit reports will not be pulled again. This is not true. If your credit scores change in the meantime your lender may consider requalifying you for the loan.
If your financial situation changes too much in the negative when the lender compares your first credit pull with the second, your home loan could simply be stopped in its tracks. For that reason, it is highly advisable not to apply for new credit before your home loan closes.
Closing Day Delays: Natural Disasters
At one time, most borrowers probably never considered the idea that a forest fire, flood, hurricane, or other natural disasters might interfere with the purchase of their new home.
But what happens when you have applied for an FHA mortgage, make it all the way through the approval process, and the property is damaged between then and closing day?
With climate change and a large number of year-round natural disaster issues to contend with in the 21st century, a delay caused by a disaster is more of a risk. What you’ll need to do in such cases is to work closely with the lender to determine whether it’s feasible to move ahead with the mortgage or not.
The extent of any damage will play an important role in that in addition to whether or not that damage can be repaired sufficiently to restore or maintain the home’s remaining economic life, its habitability, etc.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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