You’ve finished the exhaustive search for a new home and have finally made an offer on the place of your dreams. Now what? Closing on a new home can be a lengthy process, but the steps are necessary to success. Here’s what to expect in the final stages of buying a house.
Open an Escrow
The first step to unlocking the door of your new home? It’s opening an escrow. During escrow – which lasts for approximately one month – your mortgage advisor will make any required payments on your behalf to property bills that are separate from the loan payment. These payments are made out of a designated escrow account and can go toward things like property taxes, HOA fees and insurance costs.
Lock-In Your Interest Rate
If you’ve found a home and are in the process of obtaining a mortgage, it’s highly recommended that you lock in an interest rate. Exactly when you choose to lock in the rate is up to you, but a solid mortgage advisor will be able to guide you in the right direction. Some people choose to do this immediately and others prefer to wait until just before closing in the hopes that rates will fall during that time.
Schedule a Home Inspection
The last thing you want is for something to go wrong in your new home just days after moving in. That’s why it’s smart to schedule a home inspection before closing. During an inspection, specialists will check things like the air conditioning system, plumbing and electricity. New homes should be thoroughly evaluated, too; even homes that have recently passed municipal inspections by the builder. It’s always a good idea to get an objective third-party review.
Have a Pest Inspection
Hire a licensed pest inspection company to check for issues with flies, mosquitoes, cockroaches, fleas, rats, mice, bed bugs, termites, ants…pretty much any type of pest! Make sure they evaluate the home for any possible environmental health threats caused by lead, fungus and asbestos, too. Presence of any type of contamination is a subject of renegotiation of terms and possibly even a reason to rethink the deal completely.
Address Any Issues
Did your inspection reveal any problems? It’s time to troubleshoot! You may want to discuss dropping the price or asking the seller to fix the problems that were unearthed. Nevertheless, you’ll want to obtain the estimates for repairing the issues and schedule a time to do so as soon as possible.
Ask for Title Search and Insurance
Title insurance is needed to eliminate the third party ownership on the property that you are buying. A title officer will make sure there are no legitimate claims from relatives, collectors and the like on the home. Your title insurance is legal proof that everything is clear and that you have a green light for closing on – and owning! – your new home.
Conduct a Home Appraisal
A home appraisal determines the estimated market value of your soon-to-be property, based on factors like general condition, geographic location, proximity to points of interest, value of nearby homes and recent neighborhood sales or growth. Typically, a mortgage lender will need this information to make sure you’re asking for the right amount of money. Occasionally, you’ll run into the issue of a low appraisal. As a buyer, this isn’t necessarily a bad thing. But if you’re a seller who’s already negotiated a certain price, this could present a major financial problem. To help prevent this issue, make sure that the appraiser is from your county, and has a residential appraiser certification and professional designation.
Set the Day and Time of Closing
First thing’s first – you’ll want to set aside enough time in your day to finish the closing. An hour or two may not be enough time if unexpected issues arise. We recommend allocating at least a half-day’s time for the home closing. Schedule it toward the end of the month, but not on the last day – aim for a day between the 20th and 25th. That way, you’ll still have some padded time should there be any disputes. If you schedule a closing and don’t complete it by that day, you could face increased closing costs for the next month in addition to penalty payments.
Be Present at Final Walk-Through
Don’t miss your chance for a final look at your home before paying for it! Most final walk-throughs are scheduled 24 hours before closing. Make sure the home is in the condition that’s specified on your final sales contract. Confirm that any necessary changes were made post-inspection. Check if everything is in order and that any additional necessary replacements were made. If you do run into an issue, you’ll want to shift the closing day. Or, upon mutual agreement, the repair costs will be submitted to the escrow account.
You Did It! Now Prep for Closing Day
You’ve completed the escrow marathon and it’s officially time to sign the paperwork and get your keys! Prepare in advance all paperwork you collected during the process, such as title search and insurance, inspection reports, bank statements, home appraisal reports, checks for down payment closing costs, etc.
There’s likely to be quite a few people present for closing, including your attorney, a seller (or their representative), the seller’s attorney, real estate agents (for both parties), a lender’s representative, a title company employee, the closing agent and even a public notary.
You’ll be signing a string of documents – do not sign anything at this point that is unfamiliar to you. By now, if you’re working with a competent buying team, you should have seen and read all of the closing documents in advance. Make sure that you understand what you are signing and how your payments will be distributed over the designated time.
Are you you in the process of selling your house and looking for a new home? Let RedStone Mortgage assist you in finding loan options that meet your individual needs. Call us at 480-759-1500.