contract to closing
9 Steps From Contract to Closing On Your Home
Your offer was accepted on a house! Now what…? Below we will outline what you can expect to happen between making your offer on a home to getting your keys.
Previously, we stated in our article on the Home Buying Process, there are common factors which create issues for some home buyers. Yet, all of these issues are avoidable with the proper guidance, attention to detail and working with a qualified real estate professional. You have made it this far and we are so excited for you.
1. Home Inspection
A quality and thorough home inspection is of utmost importance when buying a home (even if it is a new build). The home inspection is an important step that should take place after a contract is agreed upon. Typically, in Central Arkansas the home inspection process involves a top-to-bottom inspection of the property to be purchased, and the home buyer selects and pays the home inspector. Your Real Estate Agent can provide you with a list of home inspectors. In Central Arkansas, a home inspection can cost anywhere from $200 to $400.
2. Repair Requests
After the inspection, and you have reviewed the report, you as the home buyer have the right to ask the home sellers to address any concerns you have about the property during this Due Diligence Period agreed upon in the Purchase & Sale Agreement. Your Real Estate Agent can advise you as to which repairs the home seller may be likely to perform and will write these agreements for you.
3. Due Diligence
During the due diligence period, the home seller grants you, the home buyer, the option of terminating the agreement for any reason. You may need to terminate because of financing issues, inspection results, appraisals or other testing.
As you may imagine, This process can easily amount to a complete renegotiation of the contract. The role of the listing and selling sales people is critically important to successfully negotiating this often difficult process.
As a part of the loan approval process, the lender will require an appraisal on the property to ensure that the value of the property is adequate to justify the loan. The lender for lack of a better term “orders” the appraisal and the lenders vetted appraiser performs the appraisal on the property.
Although you and seller may have previously reached an agreement on a price, the appraiser’s evaluation must support that price. Assuming the buyer writes an offer for $200,000 and the seller accepts the buyer’s offer, then both parties would want the house to appraise for $200,000 for the transaction to close. If for example, an appraiser assesses the value of the home at $180,000, the buyer would only be able to receive $180,000 of financing from the lender. Regarding specific questions about appraisals or financing please contact your loan officer.
5. Approval of Financing
When the appraisal has been satisfactorily completed and the lender verifies your income, credit, etc., the lender can then make a decision on loan approval. Both listing and selling agents will work to ensure that all necessary steps are taken to reach this point.
6. Title Company
Upon loan approval, a title company will prepare for and in most cases conduct the closing. Among other items, the attorney will check the title to the property, prepare necessary paperwork, and will often handle the receipt and distribution of all monies in the transaction. These duties may be different based on where you live, so it is always best to consult with your Real Estate Agent.
If the home will be subject to a mortgage, you must arrange for a homeowner’s insurance policy covering the property. Your Real Estate Agent will help you make sure that the coverage is adequate to satisfy the requirements of the lender. These arrangements must be made prior to closing and the policy must be present at the closing. (FYI: Taxes + Insurance bundle into your monthly mortgage payment.)
8. Final Walk Through
You have the right to do a final walk through of the property, usually a few days before closing, to ensure that all agreed upon repairs are complete.
You made it! On closing day, you will need to bring a certified check for your cash to close amount. Your Real Estate Agent should have this information to you a few days before closing.
*Cue “Home” by Phillip Phillips*