The Final Walk Thru
Inspection Before the closing takes place, it is customary that the buyer does a final walk thru inspection of the property. Is the property in the same condition as when the buyer initially saw the home? Is the yard the same? These questions should be answered prior to the actual day of closing, but oftentimes it is not possible, as the seller may be moving out the day of closing, and not able to get everything done at the time of the inspection. What happens when the buyer makes the final inspection and many items found in an inspection report have not been corrected? Who is responsible for making these corrections and should the closing be held up?

The first answer that would come to mind would be to delay the closing until the seller has completed the repairs. This may often not be possible for several reasons. The buyer may be obtaining a new mortgage on the property and the interest rate on the buyer's loan may have been "locked in" by the lender. The locked interest rate may expire on the day of closing. If not closed on time, the buyers would have to go back to the lender to renegotiate a new interest rate, which may be higher and they would generally be charged a "redraw" fee for new loan documents. In addition, the seller may have purchased a new property, and he may need the sales proceeds from his previous house to buy his new home, so a delay on this sale would delay his new home purchase. The best solution is to try and come up with a compromise at the closing table.

In order to facilitate the closing, the seller could offer to place money "in escrow" to be released to him only after the repairs have been completed. Or, the buyer and seller could agree on a price that the repairs might cost, and the seller could issue the buyer a check for these repairs. It is always best to try and arrive at an equitable compromise between the buyer and seller.
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Waiting to buy can cost you money!
If you're a potential buyer wishing you'd taken the home buying plunge while rates were low, it's not too late to dive into the market. In fact, even with interest rates on the rise, waiting to purchase a home could end up costing you money.

Here's why. Let's say you're interested in buying a house that costs $100,000, but you believe interest rates might fall if you waited one year to purchase. Would you really save by waiting? Probably not. If you were to purchase today, principal and interest payments on a $90,000 loan (after a 10% down payment) would be $660.39 at 8.0% interest. But if rates did fall over the next year, say by one-half percent to 7.5% interest, you would have lost money by waiting. Appreciation at even a meager 3% annual increase has now elevated the cost of the home by $3,000 to $103,000. That means that you'll need $300 more down payment for a 90% loan. And a larger loan will mean more closing costs . A higher mortgage amount could make loan qualifying tougher. Don't forget that your dream home you wish to purchase might not be available later especially if you purchase in a strong seller's market.

Financially, the bottom line is that even though your principal and interest payments would be $11.49 per month less with the lower interest rate, it would take you more than twenty-one years to recoup the $3,000 additional money it cost you by waiting. ($3,000 divided by $11.49 = 21 3/4 years.) That figure doesn't take into account lost tax benefits or even the value of the monthly rent you're pouring down the drain as a tenant. It's been said that if you're not buying a home for yourself, you're purchasing one for someone. Why let your landlord be the financial winner just because rates are edging up?

Perhaps you're one of those would-be buyers wanting to pay off debts before taking on a mortgage. While it's a very prudent undertaking, it may not make financial sense especially if your debt-load is not excessive for your income. The flexibility in today's extensive menu of mortgage programs allows credit-worthy buyers carrying significant debt a variety of ways to secure the type of loan they need, even if qualifying ratios are outside of the usual parameters. Loans include low-documentation, no-documentation - even stated-income loans where you state, but not prove, your gross monthly income. There's one more piece to the home buying equation that you should not overlook. It's your employment. Many buyers hesitate making their first home purchase because they're afraid of being downsized, right-sized, or otherwise having their income cut. But since lenders want to see a work history of approximately two years employment (which could include formal job training/education) it makes sense to purchase once that track record is established.