Mistakes to Avoid Closing Delays on Your Home Purchase

This guide covers mistakes to avoid closing delays on your home purchase. Homebuyers have a tentative closing date for their home closing on their home purchase contract. There are mistakes to avoid closing delays on your home purchase. The mortgage loan process normally takes 30 days from the day the mortgage loan borrower signs the mortgage loan application and submits all documents. This guide explains the mistakes to avoid closing delays on your home purchase in a straightforward and easy-to-understand manner. It is tailored for all types of homebuyers to assist more accurately in dealing with the processes involved in closing regarding mortgage stipulations like those for FHA loans, though it is relevant to all types of loans. The current date is March 22, 2025, noting real estate practices up until this time. In the following paragraphs, we will cover mistakes to avoid closing delays on your home purchase.

Mistakes to Avoid Closing Delays: Documents

Mortgage documents that need to be provided are the following:

• two years tax returns
• two years W-2s
• recent 30 days paycheck stubs
• 60 days bank statements

Mistakes to Avoid Closing Delays: Submit All Pages on Documents Requested

Other documents that may pertain to the individual mortgage loan borrower:

• if it applies to them such as divorce decree
• child support and/or alimony paperwork
• bankruptcy paperwork
• short sale paperwork
• prior foreclosure paperwork, etc

Any delays with submitting the property forms requested by loan originator and mortgage processor will cause delays in the underwriting mortgage loans. Mistakes to avoid closing delays include being prompt returning documents requested by the loan officer and mortgage processor. Besides not submitting the necessary paperwork, there are things that will delay mortgage closings.

Mistakes To Avoid Closing Delays: Don’t Delay Submitting Requested Documents

As mentioned in the earlier paragraph, there are some things that will delay mortgage closings. Every mortgage loan borrower should avoid these things that will delay mortgage closings. In some cases, mortgage loan may not close at all so need to be careful on actions to take during the mortgage application and approval process. There are many cases where a home purchase can blow up just days before the scheduled closing date. Many times, things can be avoided and over the most minor things, closings can blow up.

Getting A True Valid Pre-Approval

Every mortgage company and loan originator has their own way of issuing a pre-approval.

• Some loan originators are laxer in issuing pre-approval letters than others
• Some loan officers just run credit and ask the borrower for information and just go off the information the borrower gives the loan officers
• They do not run the mortgage file through the Automated Underwriting System and issue pre-approval letters minutes upon talking to a loan applicant
• Other loan originators will run credit, will request income documents such as tax returns, W-2s, recent paycheck stubs, and will run the file through the Automated Underwriting System for an automated approval
• There are also some loan officers who will even go to the extent of getting verification of employment to make sure that overtime income, bonus income, part-time income is valid
• They take these extra steps so there will not be a blow-up during the mortgage application and approval process

Even if it may take a few days to get a solid pre-approval, it is best to get a loan originator who will review and examine credit and income profiles very carefully initially instead of a loan originator that will just issue a pre-approval half-assed.

Mistakes to Avoid Closing Delays: Buying New Furniture With Credit

Mistakes to avoid closing delays is buying high ticket items with credit. The first thing most homebuyers do after they get an accepted home purchase contract and have their mortgage loan application submitted is to go furniture shopping. Under no circumstance go on a shopping spree buying high ticket items such as furniture and high ticket items without talking to your mortgage loan officer first. Buying high ticket items are common mistakes to avoid closing delays.

• Do not make any large ticket purchases and apply for new credit
• Many furniture and appliance companies offer no finance charges for 12 months or will offer special incentives
• Window shopping for furniture and appliances is fine
• But there are many aggressive furniture and appliance salespeople who can sell ice to Eskimos and may fall prey to that
• Every credit inquiry will lower credit scores by 2 to 5 points
• Even though there are no finance charges for 12 months, mortgage underwriters will use a monthly figure on new purchase to calculate debt to income ratios
• For example, if borrower purchased $10,000 of new furniture and payments are deferred for a year, the mortgage underwriter can take 5% of the balance on new furniture balance and tack that on as a new monthly payment

This will be a major issue for borrowers with already a higher debt to income ratio.

Mistakes to Avoid Closing Delays Is Buying New Car

A car loan payment is normally $400 to $500.

• A $400 monthly payment is equivalent to a $70,000 mortgage loan balance
• Reason car payments are so high is because they are amortized over 4 to 6 years versus 30 years on home loans
• A car payment affects debt to income ratios

Never buy a new car or trade up to a bigger lease on a car during the loan application and approval process.

Mistakes to avoid closing delays Is Changing Employment

Do not under any circumstances change from an hourly/salaried job to a commissioned job and/or 1099 job.

• Going from a W-2 Wage Earner to a 1099 Wage Earner will delay mortgage loan approval for two years
• There is a two year mandatory waiting period for those who change W-2 to 1099 employment
• Changing jobs from one salaried job to another salaried job will also cause a 30-day delay in mortgage closings

This because mortgage lenders need to do a verification of employment and require 30 days paycheck stubs from the new employer.

Mistakes to avoid closing delays Are Overdrafts In Bank Statements

Mortgage underwriters will ask for updated bank statements until the day borrowers close on their home loan.

• Any overdrafts in the past 60 days can and often times than not can be mortgage loan denials
• Pay special attention to bank statements during the mortgage application and approval process
• Also, do not make large or irregular deposits on bank accounts

Every irregular and/or large deposits need to be sourced.

Mistakes to avoid closing delays Do Not Be Late On Any Monthly Bill Payments

Mortgage lenders will do a final soft pull on credit prior to issuing a clear to close. Whether credit scores go higher or lower will not matter because they will just use the initial credit score that was submitted with the original mortgage loan application.  However, they will question any late payments, new credit inquiries, and new credit on the credit report.  Do not under any circumstances be late on any monthly payments and do not apply for any new credit during the mortgage application and mortgage approval process.

Closing Mistakes That Cost You Time

Avoid home purchase delays by evading these closing blunders.

Purchasing a house requires many steps, and closing is one of the final yet crucial steps. Unexpected delays can result in a myriad of problems down the line. In fact, the delays can be time-consuming and troublesome. They may jeopardize the entire real estate deal, especially for sellers who are short on time or have another deal waiting in the wings. Here’s a list of the possible issues you can fix, enabling on-time closing.

House Hunting Without Pre-Approval

Mistake: Setting out without receiving a pre-approval letter for a mortgage means starting the home-hunting expedition with no financial backing.

Why It Delays:

• The seller’s market is highly competitive.
• Buyers determined to sell and have the money to back up their claims are highly valued.
• Finding out your home requires bypassing lender approval, which can become the bane of your existence amidst negotiation.

Fix:

• Obtain a **pre-approval** from a lender, such as for an FHA, VA, or conventional loan.
• The lender performs a credit check, verifies income, and provides a loan estimate, which is typically valid for 60-90 days.
• While this is not a final commitment, it does suggest you mean business.

Changing Your Financial Profile Mid-Process

Mistake:

• Taking out a new car loan, switching jobs, maxing credit cards, or any other major financial activity after receiving pre-approval but before closing.

Why It Delays:

• Lenders check to re-verify your credit, debt-to-income (DTI) ratio, and employment just before closing, which is often within a 48-hour window.
• A newly added car payment of $500 a month may push your DTI above the FHA requirement of 43% (or 50% with exceptions), forcing a loan rework or denial.

Fix:

• Stay under contract, avoid creating new debt, make large purchases, or change jobs unless absolutely necessary, and consult your lender first.
• Paying off a loan may alter your credit score, so do this after closing.

Mistakes to avoid closing delays Failing to Lock Your Interest Rate

Mistake:

• Allowing your mortgage rate to float until closing without securing your rate early.

Why It Delays:

• A sudden rate spike may occur (e.g., Fed increases during 2023-2024 escalated averages from 3% to more than 6%).
• If your budget relies on a lesser rate, it could mean changing the loan or sale price, thus creating a delay.

Fix:

• Contain your rate at the time of contracting.
• Usually, it is for 30 to 60 days, which aligns with your closing schedule.
• Speak to your lender regarding float-down alternatives if rates decrease in the future.
• Rate locks are paramount for FHA loans since even slight payment changes are more detrimental with lowered down payments.

Ignoring Contingency Deadlines

Mistake:

• Not attending to predetermined deadlines tied to an appraisal or inspection financing as described in the purchase agreement.

Why It Delays:

• Many contracts offer a standard of 7 to 14 days for inspections and 21 to 30 days for loan approval.
• For example, skipping the inspection report or stalling the required FHA appraisal for the inspection set by the fund’s safety protocols can push closing back and void the deal in the worst case.

Fix:

• Create a timeline for each deadline the second you receive the contract.
• Hire inspectors urgently (ideally within three to five days) and give your lender a nudge to get the appraisal done earlier.
• FHA appraisals generally take seven to ten days in busy markets.

Mistakes to avoid closing delays Underestimating Closing Costs

Mistake:

• You think your down payment includes all costs and do not consider closing costs (2-5% of the loan amount).

Why It Delays:

• FHA loans have an upfront mortgage insurance cost (1.75% of the loan), lender fees, title insurance, prepaid taxes, and insurance.
• Coming up short leads to scrambling: fund adjustments, seller concessions, or loan adjustments that postpone delays.

Fix:

• Grab a CD three days before closing; attempt to meet the asking LE three days following the application.
• Budget for at least an additional one to two percent and inquire about seller incentives, up to six percent (FHA allows this).

Mistakes to avoid closing delays Not Reviewing Loan Documents Early

Mistake:

• Leaving the review of the mortgage documents to the last moment.

Why It Delays:

• Missing a credit, interlacing rate errors, or issues within the title, such as liens, takes time to fix.
• Congress gives a three-day window to vet the closing disclosure, meaning any last-minute fixes push the deadline back, pushing the entire schedule back.

Fix:

• Obtain copies of essential documents, the title report, appraisal, and the CD the second they become available.
• They should vet against the LE and clarify discrepancies to the corresponding lender or closing agent.

Mistakes to avoid closing delays Failing To Go On The Last Walkthrough

Mistake:

• Not looking thoroughly at the property 24 to 48 hours before closing.

Why It Delays:

• Suppose the seller has left damage, such as a broken HVAC unit, or did not complete agreed-upon repairs (common with FHA 203(k) loans). In that case, you must either renegotiate or delay closing until the repairs are completed.
• Noticing these issues on the closing day poses risks for escrow holdbacks or legal complications.

Fix:

• Schedule the walkthrough right after the seller moves out.
• Bring your contract and inspection report.
• Take photos to document issues you plan to promptly inform your agent and lender about.
• Quick fixes can often be executed through escrow credits.

Dependence On Non-Written Guarantees

Mistake:

• Putting complete trust in the obligations of the seller, agent, or lender without written confirmation, “Repairs will be done by closing.”

Why It Delays:

• These agreements won’t matter if the seller fails to meet his obligations or if the lender is mistaken about when the funds will be available.
• Without any documentation, you must prove that you must postpone the closing.

Fix:

• Everything needs to be covered in writing.
• With FHA, ensure that repair escrow accounts (where permitted) are explicitly stated in the contract because HUD regulations are stringent.

Inadequate Coordination with Your Team

Mistake:

• Assuming everything is in order with the lender, realtor, and title company without verifying that they have been communicated with.

Why It Delays:

• Oversights such as not completing the title paperwork and missing wire transfers can easily halt the closing process and lead to unwanted chaos if discovered too late.
• Because of their insurance and other appraisal requirements, FHA loans are much more susceptible to coordination delays.

Fix:

• It will go a long way to grant everyone alignment by equipping everyone with a pulse on the situation through weekly touchpoints with all relevant parties, including the agent, loan officer, and closing attorney.
• Confirming funding and wire instructions two days prior will eliminate risks, as banks need time to process large transfers.

Not Considering Seller or Third-Party Holdups

Mistake:

• Do not plan for factors outside your control, such as the seller’s mortgage payoff or slow-moving title search.

Why It Delays:

• If the seller’s lender takes its sweet time releasing the lien or faces a title issue, the closing will pause until the issue is resolved.
• In 2025, title companies will be busier mid-refinancing with rising rates, for which editors will slow turnarounds.

Fix:

• Have your agent check the seller’s payoff status early and encourage the title company to pull a preliminary report swiftly ten days after contract acceptance.
• When delays need to be escalated, your lender can be sent to a third-party counterpressure.

Bonus Tips: Slowing Down The Entire Process Is Beneficial

Mistake:

• Expecting your teammates to be able to accomplish the impossible feat of completing everything in an extraordinarily unreasonable amount of time (for example, 21 days instead of 45).

Causes of Delays:

• If FHA loans are the focus, completing them in 30 to 45 days is impossible as the property needs to undergo meticulous checks.
• Although people try to rush the process, missing steps like underwriting and appraisal will lead to repetitive FHA appraisal errors and long-term persistent difficulties.

Solution: Include a 45-60 day closing period in your offer and buffer for unavoidable obstacles. If the seller is keen on speed, negotiate with them about rent-back or a contingency to avoid furthering the problem.

Why Care About These Mistakes

• Delays are worse than stressful and can also harm one’s property purchase.
• A seller can jump off if they are strategically dependent on the funds.
• Either you or they will get stuck with rate locks, earnest money, and inspection fees.
• Delays for setting Minimum Property Standards, such as a roof, allow FHA buyers to void approval.
• Those backup offers in 2025 in an aggressively competitive market mean less forgiving sellers.
• Be sure everything is done in the optimal order to avoid getting side tracked.
• Take detailed notes during home inspections and set permanent agreements while communicating frequently.
• Set aside funds for concealed expenses and ensure that proactive document revisions are regularly done.

Avoiding these pitfalls ensures you arrive at the closing table on time with your keys in hand. I will adjust if you need details tailored to your loan type or situation! This guide aligns with the GCA Forums News readers by being helpful and general while addressing nuances like appraisals and repair escrows specific to your previously asked questions on the FHA.