A concern for anyone buying a house is missing a closing date. This can cost the buyer their earnest money, kill a deal, or leave them without a place to live if they are selling a house and buying a new one. There are dozens of reasons why buyers miss a closing date, but the two most common reasons are a delay on a sale of a current house (in the event they are selling a house and buying a new one) and the bank can’t get the mortgage paperwork finalized in time.

If you are going through the process of buying a house, I would recommend adding a few contingencies. Contingencies are clauses added to purchase contracts which protect your earnest money if certain events cause a delay in closing or cause the deal to fall through. Common contingencies include one requiring you can find financing, one requiring the financing has a reasonable interest rate, and one requiring the sale of an existing home to buy the new one. So if you have these contingencies and any of them cause you to delay or cancel the sale, you are protected.

But if you don’t have these contingencies, or they do not apply, the seller has the right to cancel the contract when you miss your closing date and keep your earnest money. And while you can add a contingency relating to obtaining a mortgage, there is quite a bit of gray area there. If you qualify for financing at a reasonable interest rate and simply cannot get the paperwork finished in time that can be considered a breach of contract, as it does not technically fall within either contingency. Most sellers will not cancel the sale, as they have time and money invested in this sale, too, but I have heard of it happening. If someone else has shown interest in the property or if the person has had a situation change (such as a job forcing a relocation fell through, another house purchase fell through, etc.), they may be excited to break the contract and keep your money.

So when shopping for a lender, be sure to ask what percent of closing are on-time, and what their average turnaround time is for processing a mortgage. If they have a habit of missing closings or take longer than you need them to, then you may want to find someone else.

If you have any questions about missing closing dates or need a preapproval letter, please contact me. If you have anything else to add about missing closing dates, please leave a comment.