Interest rates for homes for sale in Arlington, VA are super low, in case you have not heard. This means there are an unusual amount of refis going on and lots of people are buying. What this also means is some lenders, especially big ones, are way overloaded and thus not meeting deadlines. When I enter into a Buyer Brokerage Agreement with a buyer, the contract under which we agree to work together, I discuss what I will do for them. Why they should use me as their agent. I describe my role as "project manager" for your purchase. This means, I am taking the responsibility for making sure you are protected every step of the way. A major part of my job as your agent is keeping you on track to make sure you do not default and risk losing your deposit and even more.
You can default on your contract to purchase a home for sale in Arlington, VA if you do any of the following.
Make a major change to your financial situation. For example. Don't incur a lot of debt. Don't buy a car, boat or investment property. Don't open a big line of credit at a furniture store or Home Depot. It can throw off your debt to income ratio and can cause your entire loan to have to go through underwriting all over again. This is not a simple process. You know the phrase "reinventing the wheel"? Well this is essentiall what will happen to your loan in underwriting when you throw things off like this.
Get a big pile of money in your account that you cannot document. You think - Why can't I get more money?! Well if you sold your childhood baseball card collection for $5,000 to some guy on Craigslist who brought a bag of cash, you will probably need to explain this to the bank. They are going to be worried that a) It's illegal money or b) It's borrowed money. Either way, they won't be happy if you can't document it with paperwork and your loan will be stopped in its tracks and you will likely cause a delay in closing or lose the loan altogether and risk default.
Refuse to give the lender what they ask for. The contract calls for the purchaser to comply with the "lenders reasonable requirements." Reasonable is a subjective term, and sometimes it seems unreasonable for them to ask for what they do. Just give it to them. You will probably be inconvenienced a bit. For example, if you have a bank deposit that doesn't match your pay stubs (see above) you will need to document what it is. If it's a stock sale, you'll need to show the brokerage receipt, if it is a gift from grandma, it needs to have a letter from grandma, possibly notarized to prove it is not a loan.
This should be obvious but I've heard it has happened - Quit your job and not mention it to anyone involved in your home purchase. So what if you get a bigger, better, higher paying job? That's great! Just make sure you tell your Realtor and your Loan Officer up front and get documentation from the new employer that will satisfy the lender. You see, loan underwriters like to see two periods of paychecks, and you probably won't get that in time to close, so ask them what else your new employer can do to satisfy this requirement. And if you can't do anything, your agent will need to work with the seller for a settlement extension so you are not in default.
What exactly is this default anyway? A delay in closing. Letting closing day come and not showing up with a loan at the settlement table. Won't the seller just understand that things happen? Loans are hard to get? Have some sympathy man! Sellers come in all different shapes, sizes and circumstances. Your delayed settlement could lead to their default on their next purchase. They could have a transatlantic move planned and your delay could cause a lot of costs, and effort and change in plans for them. If you delay closing, they could have to incur the cost to get a hotel to stay and wait, or arrange a Power of Attorney to sign in their place. Some people are okay with change others are not. Some sellers will simply not tolerate delays, play hardball and will call a lawyer and threaten a suit. These are not risks worth taking. You could be at risk for more than your deposit. The default paragraph in the contract in Northern Virginia is clear - do not to anything or not do anything to delay settlement. Don't count on the seller being sympathetic, just don't default. I've never had a buyer default, because I make sure they are aware of these things and stay in communication with them, and the lender, throughout the closing process.
If you are thinking of buying or selling a home in Arlington, VA or Northern Virginia, DC suburbs, give me a call to chat.
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