This year for Halloween, we are handing out tips to make the escrow process a little less spooky. But what is closing?! Well, it’s the final step before that house is YOURS! On your closing date, the closer records your official documents, and you become the legal owner of the property. You can find your closing date listed in the contract. The buyer and seller agree to this specific date. Sometimes, this date can change. Your agents, lender, and title company all work together to close the deal, but things can arise that will push the closing date back. There are some things you can do to prepare for closing and help stay on target. First, choose a wickedly good team. You will want an experienced real estate agent, a trustworthy mortgage professional, and an excellent escrow/title officer. (Hint: Pioneer Title Agency has you covered). Next, create and complete your “Closing Checklist.” Your dream team you just assembled can help you put this together. Be sure to include your closing contingencies on your checklist! Closing contingencies are conditions that are spelled out in the contract. These need to be met to close. Contingencies can include:
- Home Inspections: You will want to hire a detailed home inspector. They will make sure there are not any hidden issues in your home that could end up costing you a big bag of candy after the close.
- Appraisal: When financing your home, an appraisal is required by your mortgage professional. This process keeps them from loaning you more money than what the home is worth. The appraisal will estimate the current market value of the property.
- Loan Documents: If you plan to finance your home, you will have a few hoops to jump through to get approval for your financing. Be prepared by organizing your finances and documents. You will most likely need to submit; income statements (pay stubs and tax forms) and asset statements (bank accounts).
- Homeowners Insurance: Frequently, lenders require homeowner’s insurance. Homeowners insurance will help cover the cost to repair, rebuild, or replace your new home if it is damaged.
- Final walk-through: This typically happens 24 hours before closing. At this point, the seller should have completed items in the contract and BINSR report. During the walk-through is a great time to test major appliances, light fixtures, toilets, etc. Any issues you see, bring them to your real estate agent’s attention.
- Appraisal problems: The appraisal may come in low. When this happens, your lender can not approve a loan amount for more than the appraised value. When this happens, you can still save the deal. Some options include: asking the seller to lower the asking price, challenge the appraisal, cancel the contract, meet in the middle with the seller to pay out of pocket.
- Loan Problems: When you are pre-qualified for your home, your lender considers everything. They look at things like your debt to income ratios, assets, and what your potential payment will be. Your finances are assessed, and those specific numbers determine your loan amount. If you go and open another credit card, purchase a car, quit your job, or rack up a new debt – this can throw everything off. Stay in contact with your lender to make sure you are not doing anything that will cause an issue.
- Home Inspection Problems: Almost every house will have some issues that arise in the inspection process. Most are minor and can be easily fixed. However, some problems can be pretty significant and could be a warning sign you can’t ignore. These could result in delays in fixing the issue or a canceled deal.
- Title Problems: During the escrow process, your title officer will be preparing your title to be “free and clear” at close. This means they will be removing leins, ordering payoffs, dealing with taxes, and much more. While most issues can be resolved in the time frame, some problems can take longer and delay closing.