The Houston Chronicle ran an article in last Sunday’s paper entitled, “Some in home market just call it all off”. The article looked at reasons buyers walk away from a home purchase before closing.
The article lists several factors for a contract falling apart, including:
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Declined mortgage application
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Failures in loan underwriting from appraised values coming in below the negotiated price
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Problems related to home inspections
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Employment losses or job transfer issues
The article also mentioned some not-so-common reasons for a contract falling apart, such as lack of confidence due to stock market losses.
But the focal point of the article was on buyers who walk away from contracts because the lending process is too difficult or frustrating for them.
One particular couple was interviewed for the story, and they admitted to walking away from a contract just 16 days into the deal because of the amount of documentation required by the lender. They cited a large deposit in their bank account that resulted from the sale of a boat, and the lender wanting them to produce a detailed paper trail of the transaction. According to the article, the frustration was too much for them, so they bailed.
Lending today is certainly a different ballgame than it used to be. Good grief, when we bought our home 15 years ago, the lender pulled our credit and said okay…and that was it! Now, the amount of documentation required to get a loan on a home can be enormous. It’s not easy.
But, if you want to buy a home, and you can’t pay cash, then your choices are to jump through the hoops the lender wants you to jump through, or just don’t buy. As my friend Pete would say, “You’ve got to do what you’ve got to do!”
A good Realtor will educate you about the lending process before you begin your home search, and will put you in touch with a good lender who will prepare you for all that you will need to do to acquire a loan. It shouldn’t be a surprise when the lender sends you a list of 21 items to gather up for the loan application, or questions that large, unexplained deposit that went into your checking account last month.
If you are about to begin the home-buying process, know that it will involve some effort on your part, and a lot of cooperation with the lender. When you’re prepared in advance for what you’ll need to do to get a mortgage loan, then you will be less likely to walk away from your dream home in frustration.
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