Planning for a Bright, Financial Future

Are you about to buy a home? Once you have your mortgage pre-approval in hand, you might assume that everything is going to go fine--but there are some issues that could still prevent your mortgage loan from going through when you hit escrow. Escrow is the process that occurs after you've already had your offer accepted but are waiting to actually exchange the funds.

1. Incomplete or Erroneous Title Records

An escrow company generally searches the title of a property to ensure that the property actually belongs to the person selling it. Occasionally, incorrect title records could cause a delay in planning. If the title records take too long to fix, you may find that your pre-approval period ends and that your loan needs to be approved again. And if there have been any major changes in either your credit or your financial situation, you may find yourself looking for another lender.

2. Liens on the Property

Sometimes a lien on the property isn't noticed until the escrow company begins the process of switching the title to you. A lien on the property prevents the property from being sold at all. Depending on whether the lien is correct or not, you could find yourself having to either move on to the next home or take a rain check on your mortgage loan. 

3. Incorrect Building Permits

Part of the escrow check will be to make sure that the correct building permits have been properly filed. There are few things that will put a bank off a property as quickly as having improperly built additions; many banks will refuse to lend to you if your building is not up to code, as it means that they'll have a hard time getting value for the property in event that you default on the loan. 

4. Higher Than Anticipated Fees

Once the escrow documents have actually been drawn up, your banker will look over them and will let you know how much you need to pay. Your payment doesn't just include your down payment, it also includes many fees associated with the purchase. Often, this amount can increase throughout the process. If you can't come up with the cash, you'll usually find yourself back at square one. 

A good lender will be able to work with you throughout the process of escrow to advise you on any potential complications and to help you sidestep problems before they even occur. If you have any specific concerns regarding any of the above issues, you should bring them up as early as possible. For more information, talk to a company like Commonfund; Mortgage Corp.