Buying a home is definitely an exciting undertaking, but it can also be overwhelming and more than a little nerve-wracking, especially when the markets move with the velocity that we have seen lately throughout Massachusetts.
Beyond that, a lot of things can go wrong in the process – everything from agent incompetence or negligence, or mere carelessness. And in today’s Greater Boston real estate market, where the supply of specific property types such as suburban single-family homes and multifamily units falls far short of the 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 complications – a multi-layered process that can have numerous twists and turns. To help prepare you for what lies ahead, here are 6 things that can go wrong during your home purchase in Boston.
1. Mortgage Difficulties
Your home purchase in Boston depends primarily, of course, on whether or not you can secure financing. And much can go wrong at this stage to complicate your home purchase.
Even if a buyer is pre-approved for a loan, problems can arise at the last minute. What if the borrower loses a job, changes careers, gets divorced, makes a major purchase, experiences a major shift in income, or has 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 chooses not to agree to them, the buyers would have to secure new financing, resulting in a delay.
Your lender could cause a hold-up too. For example, if you have been approved for financing, but processing of the loan package hasn’t been completed, this will undoubtedly result in a delay. Lenders are swamped these days, and everything is taking longer than you might expect.
2. Low Appraisal Value
Another thing that can go wrong during your home purchase in Boston an appraisal that comes in too low.
In almost all cases, lenders will require an appraisal of the home in question. Remember, a mortgage is an investment for the financial institution, whether they choose to retain the loan as a portfolio loan or immediately sell it on the open market, it is an asset for the bank. They need to be sure that the amount that they are lending plus the buyer’s down payment is for a property worth at least the sum total of those items.
But what happens when the appraisal arrives at a valuation lower than that selling price?
When that happens, you have a few unpleasant options.
You can make up the difference out of pocket, find additional financing, pay for another appraisal, or back out of the deal entirely.
This is where you need to be sure that the language in your Purchase & Sale agreement protects you should the appraisal come in low, requiring you to back out of the deal and not lose your deposit. Appraisal contingencies in the sales contract protect you. To find out about structuring the best sales contract, contact us at NextHome Titletown Real Estate at (617) 657-9811.
3. Inspection Issues
The dreaded inspection.
Buyers hold their breath. Sellers hope that the home they are falling in love with will not have major issues. And if it does, buyers are wondering if the seller would be willing to renegotiate.
Inspection issues can be obstacles to your home purchase in Boston. Items like pest infestations can stall your mortgage until the problem is rectified. The inspection may also reveal that repairs are needed – which could result in a similar outcome. If the home’s integrity has been compromised by something like a damaged roof, foundation issues, or major plumbing or electrical problems, such repairs will have to be made before you can close unless you can negotiate a drastically reduced price.
4. Insurance Problems
Your home purchase in Boston can also be derailed by insurance problems. 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.
Climate change is real. As are flood maps.
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.
5. Last-Minute Delays
And then there is any number of last-minute delays that can affect your home purchase in Boston. 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. Poor Preparation
A final thing that can go wrong during your home purchase in Boston is that a buyer (or the buyer’s or bank’s attorney) is not aren’t as prepared to close and could miss some steps. This is especially common when attorneys with primary practice areas outside of real estate are used for real estate closings.
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.
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.
Learn more about what to expect and what can go wrong with your home purchase in Boston! Contact us today for more information! (617) 657-9811
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