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Why Would Buyers' Mortgage Lender Need to Extend the Closing Date on a House?

In the process of buying a house and obtaining a mortgage, there may be instances where the closing date needs to be extended. This article aims to explain the reasons behind such extensions, the benefits they offer, and the conditions under which buyers' mortgage lenders may need to extend the closing date.

I. Reasons for Extending the Closing Date:

  1. Delays in Loan Approval:

    • Additional time may be required for the mortgage lender to complete the necessary paperwork and approve the loan.
    • This can occur due to a high volume of loan applications or complex financial situations.
  2. Appraisal Issues:

    • The lender may need more time if there are complications with the property's appraisal, such as discrepancies in value or repairs required.
  3. and Insurance Concerns

    • Unexpected title issues or complications with insurance coverage may arise, necessitating an extension to resolve these matters.
  4. Buyer's Financial Situation:

    • If the buyer encounters unforeseen financial challenges, such as changes in employment or credit score, the lender may need additional time to reassess the situation.
  5. Seller-related Delays:

    • The seller's circumstances, such as difficulties

If you need to bump your closing date, check with the other parties involved in the sale to make sure the new date works. The real estate agent or attorney of the party who needs the date change will make phone calls on behalf of their client to get the date moved.

What happens if you don't close by closing date?

Buyers who miss their agreed upon closing date could be at risk of a delayed closing penalty. This could be a per diem fee due to the seller or the forfeiture of the buyer's earnest money deposit (the amount of money buyers put down as evidence of their financial ability to purchase a home).

What to do if buyer keeps delaying closing?

Your only option at that point is either continue to wait it out with the buyer's lender to see if he or she eventually gets qualified, or you can say no to the next contingency extension request. That will force the buyer to cancel the deal, however, he or she will get the earnest money back.

Why would a buyer ask for an extension?

Sometimes, despite your best efforts, you may encounter a situation that prevents you from closing on time. For example, there may be a delay in the title search, the loan approval, the appraisal, or the repairs. In this case, you may need to request an extension of the closing date from the seller.

Why do closing dates get pushed?

If the mortgage lender finds some new financial activity in their final credit review, they may ask for an explanation that pushes back the closing date. Title searches can be one of the most intricate parts of preparing for a closing.

Why would someone extend the closing date?

Common Reasons for Extending Closing

The most common reason buyers need more time is to approve their loans. Verification processes often cause delays in loan approval; underwriters can stay caught up while home inspectors reveal major issues that result in a stalled loan approval.

Why does my closing date keep changing?

It's common to shift a closing date by a few days to make things work for all parties. No one can predict what will happen in the weeks that lead up to closing day. For example, if an inspection reveals a major issue with the home, the buyer may negotiate with the seller to fix the repair or lower their asking price.

Frequently Asked Questions

Can a seller refuse to give an extension?

When a seller refuses to sign an extension, it can create complications in the real estate transaction. The main complication is the entire transaction could blow up, but sellers aren't required to sign a contract extension.

What to do if seller asks for extension?

Negotiate a Per Diem Penalty

In addition to compensating the seller for the extra mortgage, tax, and insurance payments the seller still has to make due to the delayed closing, a per diem penalty is charged to the buyer as compensation for the inconvenience of delaying the delayed closing.

What is the longest a closing can take?

Closing on a house can typically take 30 – 45 days. According to an Origination Insight Report by ICE Mortgage Technology, as of September 2021, the average time to close on a home purchase was 50 days.

FAQ

Can the buyer delay a closing date?
Once the closing date that you agreed on with the seller has passed, they can choose to extend the closing deadline but in doing so charge you a daily rate (or “per diem”) to help cover costs related to additional mortgage, tax, and insurance payments they have to make as a result of the postponed closing.

What happens if you can't close by closing date?

In some cases, the seller may extend the closing date but charge a daily rate for the inconvenience or seek legal advice to recoup damages caused by the delay. Whatever the reason for the delay, if the home doesn't close on time, the purchase contract will usually expire.

Why would buyers mortgage lender need to extend the closin date on house?

How long does it take to close after making an offer?

30-45 days

Your closing is typically 30-45 days after the offer has been accepted. It also depends on the deal that you negotiated with the sellers of the home. A closing day is a big event. Once all of the papers have been signed, and all the checks have been written, the house will be transferred into your name.

How long to hear back after making an offer on a house?

The seller responds to your offer

The seller should get back to you within a few days, and there are three potential responses: an acceptance, rejection, or counteroffer. The seller might ask for more money, a larger earnest money deposit, or a specific date for the buyer to take ownership.

  • Why does closing take 45 days?
    • There are lots of parties involved in the mortgage lending process. A lender will want to take a close look at the buyer's financial situation to fully approve their loan. It will also want to get the home appraised, conduct a title search and more — all of which take time.

  • Why would the buyers mortgage lender need to extend the closin date on house?
    • Nov 27, 2019 — Most parties schedule the closing date for 30 to 45 days after agreeing upon an offer to give the lender enough time to review your financial 

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