Top Last-Minute Financing Blowups

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Sometimes a perfectly-executed deal can implode due to avoidable financing issues. Keep an eye out for these common problems throughout the closing process – don’t let them derail the sale!

  1. Missed liens at closing. The title company needs to give the lender a 100% clear title, and all seller liens must be paid and satisfied.
  2. Spouse not at closing. If your client is married, their spouse needs to attend the closing, along with anyone else listed on the mortgage or title.
  3. Incorrect property expenses. If the property taxes, homeowner’s insurance or homeowner’s association dues are much higher than originally estimated, the debt to income ratio may be too high to qualify.
  4. Occupancy concerns. Sometimes, an appraiser overhears or is told something different than the lender is told.
  5. Unable to obtain insurance. If your client is unable to secure insurance, it will pose an issue during closing.
  6. Unknown lender. An inexperienced loan officer can create problems. The deal may turn out to be completely different than the buyer expected due to changed fees or rates.
  7. Borrower-related changes. Any financial issues, such as credit card debt or unexpected unemployment, that could affect the borrower’s position will also affect closing.
  8. Property issues. The lender needs to know upfront if the seller has only owned the property for a year or less or if there are any inspection issues prior to appraisal.
  9. Money needed to close. Not receiving the down payment money until right before closing could cause a delay, as could undocumented or unexplained large deposits.

Of course, many issues on the seller’s side usually arise right before closing. Stay on the lookout for these problems, as well:

  • Seller on contract documents is not listed as the owner of record.
  • Seller owes more than previously thought and cannot close without increasing the sales price or coming up with money out of pocket.
  • Seller did not inform the buyer or agent of large HOA transfer fees and dues that are paid at closing.
  • Work agreed to be completed prior to closing is not finished at walk-through.

Bottom line: Pay extra close attention to these details. A seemingly minor issue can delay or even prevent a successful closing.


Written by Krista Wilson
Managing Broker
ReeceNichols Real Estate, The Village