Money and Mortgage
Common Concerns Regarding Home Loans
Buying a home is an exciting process, but it is not without its challenges. Unfortunately, when it comes to moving forward with a mortgage, sometimes buyers are unable to do so. Here are the top five reasons why home loans fail:
1. Applications for Home Loans are Denied
This is one of the most common reasons why a pending sale of a home falls through. If a buyer does not qualify for financing, they will not be approved for a mortgage, making them unable to buy the house they want. Many buyers think that a pre-approval or pre-qualification leads to a home loan. Unfortunately, a mortgage is not guaranteed from these letters. Losing a job, credit score changes or any other financial change could impact approval for a loan.
2. Major Issues With the Home Inspection
Home inspections are very important. They will notify future homeowners of any major repairs or issues that they may not have been aware of when going through the home tour. Inspections may reveal issues that the buyer feels are too problematic or extensive, such as mold, foundational issues, plumbing problems, or roof damage. Potential buyers can use a home inspection contingency to back out of the deal and cancel the mortgage. Before putting their houses on the market, sellers should always consider updating their homes and disclosing major repairs.
3. Buyer Cannot Sell Their Existing Home
Some buyers decide to look for a new home before they sell their existing one. This can be problematic if they are unable to sell their old home before the mortgage on the new home begins. Many buyers who are selling and buying at the same time will write an offer on their new home with a home sale contingency. A home sale contingency is when a buyer makes an offer on a home, but if they do not sell their old home within 30 or 60 days, they can pull out of the deal. Home sale contingencies can be risky for sellers because there is no guarantee that the buyer will sell their home within the number of days in the contract.
4. Buyer or Seller Changes Their Mind
This happens more often than you may think. Buyers may get cold feet and change their minds about purchasing a new home. Many buyers do not realize the responsibility of a new home and get worried about paying a mortgage, interest, property taxes, and home maintenance. This may cause them to back out of a deal. If a buyer changes their mind, they may have an out through the contingencies in the home purchase contract. You can only back out of a contract if there are legitimate contingencies and a valid reason for canceling a contract.
5. Changes in the Buyer's Finances
Another common reason that a buyer may not move forward with a loan is that their finances changed significantly from the start of their mortgage application. Change in employment can cause quite a big problem in your housebuying journey. If you are laid off from a job or quit on your own, you will take a big dip in income. This may cause a lender to review your application and see if you can still afford a mortgage.
Avoid making any large purchases before getting fully approved for your mortgage. Your credit score also has a big impact on home loans and should maintain good status with lenders. Finances can also be impacted by sudden life-changing situations, including marital troubles, serious illnesses, or any other problems that may cause a buyer to cancel a contract.
Before making any sudden decisions, consult with your real estate agent and loan officer about what may be impacting your decision to move forward with your loan. Our professional agents at HomeHunt will help you find the home of your dreams and ensure that any problems you have will always be figured out with your happiness and wellbeing at the forefront of any decision.