"Bust Out" is the term used in the Mortgage and Real Estate world that describes a deal that has gone south and is no longer moving towards closing.
It happens, so always submit a back up offer on a home you like, even if it is under contract. If a bust out occurs, your up next. We never want to see a BO next to your name on the board.
Here are the top culprits that cause a bust out:
1. Don't Mess with Your Mortgage Pre Approval This is the point where many borrowers run afoul. If you hope to keep your purchase alive, don't do anything - from application to closing - that might change your financial picture and sabotage your final approval.This means no shopping on credit for appliances, furniture or anything else. Don't switch jobs, fall behind on your bills, co-sign a loan for anyone, or in any way reduce the income stated on your application.
2. Read Homeowners Association Documents Carefully When you purchase a home in a managed community governed by a homeowners association (HOA), you'll be given a mountain of paperwork to read and approve. Because there may be deal killers included in the fine print, it's important to get to this task immediately upon receipt of the documents.
Look for any information about liens against the property; current litigation against the HOA, the builder, or the developer; and any red flags in the HOA budget.
3. Home Inspection Problems All homes - even newly constructed ones - may have problems. Going into the process not fully understanding this can set you up for a failed real estate deal. Sure, you ideally want to find a home that was owned by Mr. or Mrs. Clean who conscientiously took care of it during their entire ownership, but those are few and far between, and seeking them out is unrealistic.
Set your sites on finding a home that has small, easy-to-fix problems, and don't freak out if some are worse than others. In other words, when considering making an offer, laugh at the loose doorknob but negotiate when it comes to water damage or worse.
Sure, in a buyer's market you may get away with minor demands. In a seller's market, however, there is always a cleaner offer right behind yours.
4. Budgeting Blunders, under estimating closing costs You may understand your down payment expense, but make sure you have a clear idea of total closing cost required. Closing costs are a little harder to pin down. They vary wildly and depend on the type of loan, the amount of the down payment, and a host of other factors.
The total amount of cash to close is often not disclosed until 24hrs before closing. To avoid this particular problem, pay attention to all communications from your lender. Get an estimate and understand the how much will be required from you to close.
Pay close attention to the "Calculating Cash to Close" section, which concludes with an estimated cost to close the loan. Remember, this is an estimate and the amount may go higher or lower in the end. Speak with the lender if you find any problems here, especially if it will be impossible for you to come up with this money.
Just before closing you will receive the "Closing Disclosure," which is quite similar to the estimate, but these figures are final. Again, review the "Cash to Close" figure.
By and large, real estate deals conclude successfully. Typically, it all comes down experience. Edie Webber and team are experienced in every part of the process and will make sure YOU DON"T BUST!
Author:Edie Webber Phone: 817-798-6630 Dated: September 2nd 2016 Views: 187 About Edie: My current state of happiness and realized dreams is the hard won result of a lifetime journey. I ha...
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