You have been pre-qualified with a great lender and your offer on your dream home was accepted. Now what, you ask. Well, first of all…CONGRATULATIONS, you’re about to be a homeowner!
The very first step during this time is to give the agent a check for Earnest Money. This is to be held by the listing company brokerage until closing day, in a special trust account. It will be credited back to you at closing for your down payment or closing costs.
The next step is to be aware of timelines and to set up inspections to be performed during the Due Diligence time, which is usually the first 7-10 days after the contract was binded. Binded means that all parties have accepted the negotiated terms and signed the contract, the agent will then “Bind” the document, making it legal and send copies to the other agent, closing attorney and lender. All contract timelines begin at midnight of binding date.
Inspections may consist of many different types but the main ones are a home inspection and a termite inspection. Some of the items the home inspector will check are the appliances, main systems, cosmetic issues, insulation, windows, electrical and plumbing. They will check the crawlspace and sometimes a visual inspection of the roof. This is a small price to pay to make sure that everything appears to be functioning at the time. They will then give you a report of any issues that may need attending to, as well as maintenance items. I have been asked many times who pays for the home inspection and my answer to that is that the buyer should hire and pay the home inspector because you want the inspector to work for you, not the seller.
During this early time of contract, the lender will be starting on the loan approval process. They will be asking you to provide information and documentation. You will need to be readily providing whatever the lender is requesting with as much accuracy and honesty as possible to keep the process moving along smoothly. As time progresses, usually after the due diligence time, the lender will order the appraisal to be performed. The appraisal is an evaluation that the bank requires to make sure that the property is worth what the buyer is borrowing so that they are making a sound investment. The buyer pays for the appraisal.
The closing attorney’s office will begin a title search a little later in the process, once you get through the due diligence time and things are moving forward. They will provide title insurance information, prepare the HUD statement (used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate) before closing and file for the deed to be in the buyer’s name after closing.
As you get closer to closing time, the lender will ask you to get home insurance quotes so that they can add the cost into the monthly payment, so you should be shopping for the best rates. You should also be calling about having utilities transferred into your name for move in day.
Something that is very important to be aware of during the lending approval time is not to make any changes on your credit status. Do not apply for any new loans or credit cards, do not pay off any credit cards or accounts without first speaking to your lender. Do not close any credit accounts. Do not make any late payments. Do not move money from one account to another and do not deposit or withdrawal large amounts of cash without proof of where it came from. For instance; if you sell a motorcycle or boat to get money for your down payment, you will need a Bill of Sale as proof of where the money came from. The lender will be noticing any of these changes and they could put your loan in jeopardy.
Closing Day: Yay! You made it through contract time to closing day. Your agent will give you a time and place to meet for the closing. You will be given a HUD to review. Usually, your agent and many times your lender will be with you and the attorney at closing. The first thing that will happen when you check in to the receptionist desk is that she will ask to make a copy of your photo ID. Be sure to bring your checkbook along for any unforeseen changes that may occur, although this is unusual. You will sign a lot of paperwork that the attorney will explain to you so practice your cursive writing, as you should always sign in cursive. You will be given the keys at the end of the closing and be on your way to move in to your new home!
Don’t forget to write a great review for your agent who has been by your side throughout the process, explaining everything and protecting your interest!