Buying a home, though it can be a dream-come-true for many people, is one of the most stressful events most people will have to face in their adult life. In 2018, Homes.com surveyed 2,000 Americans and found that 40% of people felt that it was the most stressful experience in modern life. More than one-third of homeowners even admitted to breaking down into tears during the home-buying process! Home-buying is, unfortunately, a fairly complicated process.Here are some key things you should know about just what makes this process so complex.
How RESPA Saved – and Worsened – The Home-Buying Process
In 1974, the Federal government passed legislation that was intended to protect consumers from untrustworthy and misleading practices of real estate and housing professionals. The Real Estate Settlement Procedures Act, or RESPA, was intended to eliminate kickbacks and referral fees that piled on tons of unnecessary expenses in the home-buying process. Though it did somewhat achieve this, it also greatly increased the complexity of the process altogether.
Under RESPA, lenders and mortgage professionals are required to provide buyers with disclosures outlining the true costs of the settlement process promptly. In addition to prohibiting the predatory tactics of kickbacks and referrals mentioned earlier, it also limits the use of escrow accounts. While these are great protections, the result is a confusing, extremely overwhelming home-buying experience. Now, to protect consumers from abusive lending tactics and fraud, they have to deal with numerous parties:
- Escrow service
- Mortgage provider
- Title insurer
- Home warranty provider
- Insurance provider
To make matters worse, each of these parties charges individual fees. So, not only is the real estate agent making commission from the purchase of your home, but you’re also shoveling out tons of money on all of these additional services with no option to bundle them all and streamline the process.
Factors That Slow Down the Buying Process
Thirty-eight percent of home-buyers said that the process of buying a home took much longer than they originally expected. This is, unfortunately, one of the many elements that discourage prospective home-buyers, often to the point of giving up altogether. When everything goes according to plan, the closing process can go as quickly as 21-28 days. The average time it takes to close on a home loan is about 44 days, however. Many factors can cause this process to take significantly longer, though. Such factors include:
- Homeowners Association complications: If the original homeowner has outstanding HOA fees, this could stall the process of closing on the loan.
- Additional requests from the lender: This is what most people are familiar with. Lenders can be extremely finicky and may request additional information last minute, bringing closing to a screeching halt.
- Problems with appraisal: The bank must appraise the home before you’re even approved for a mortgage. If this appraisal is too low, the seller must renegotiate their asking price.
There are so many more factors that can cause delays in the process of buying a home. Working with a qualified mortgage professional will ensure that this process goes as smoothly as possible, so you can get into the home of your dreams within the time you expected. Contact a mortgage professional today to get started.
