When finally approaching the finish line on your race to getting your new home, you will want to avoid any mishaps that could stall things.
Square Away All Contingencies
A lot of purchase agreements have specific contingencies that you have to think about. These are things that buyers have to do prior to making the transaction official. Below, we will go over some of the most common contingencies that will be included in your closing process.
1. Inspection Contingency: This is a right that a buyer has that allows them to have the home they are buying inspected by a professional. During the inspection, if something is found to be wrong you will be able to request it to get fixed or you can completely back out of the sale altogether. It is usually not advisable to waive this contingency.
2. Appraisal Contingency: This contingency deems that a third party that was hired by your mortgage lender will evaluate and determine your home’s fair market value. If it is said that the appraised value is less than the actual price of the sale, the contingency will allow you to legally back out of the deal without forfeiting the earnest money deposit you placed on the home.
3. Financing Contingency: This particular contingency will be put in place to give you the ability to back out of the deal if you happen to have your mortgage approval be declined. You will have a specific set amount of time as dictated by the terms of the sales contract. This is the amount of time that you will need to get a loan that will effectively cover the cost of the mortgage.
Clearing The Title
When you purchase a home, you ultimately take the title and establish legal ownership of the house. This is a process that is legally confirmed by local public land records. Throughout this process, your lender will need you to get a title search and you will be required to purchase title insurance in order to protect you from potential claims to the house.
Getting Final Mortgage Approval
So you’ve already made the down payment. Prior to being able to close it out, you must bring your home loan through the underwriting process. Any underwriter has a job to ensure that you have represented everything including yourself and your finances with complete truth and that you haven’t gone ahead and made any false claims on the application you submitted for your loan.
Review Your Closing Disclosure
If you are getting a loan, one of the best ways to ensure that you are preparing properly by reviewing your closing disclosure which is also referred to as your HUD-1. This is an official document which effectively details the exact mortgage payments you will be making, the terms of the loan, and any added fees that you will have to pay which are referred to as closing costs which can account anywhere from 2 to 7 percent of your home’s total price. You will need to compare your closing disclosure to the actual estimate of your loan that your lender provided you. If you notice any discrepancies throughout this review, you should bring any questions you have to your lender.
Complete A Final Walk-Through
Many sales contracts will give you the ability to do one last final walk-through of the home within 24 hours of closing on the home.
Bring The Requisite Documentation To The Closing
When you are heading to the closing table, you want to bring the following items:
1. Homeowners insurance proof.
2. A full copy of the contract you have with the seller.
3. Any and all home inspection reports.
4. Any of the paperwork the bank needed to approve your loan application.
5. A Government-issued photo ID (Any newlyweds that have recently had a name change should note that the ID has to match the name that appears on the title and mortgage of the property).
You should be planning to sign a lot of paperwork. An attorney and/or a settlement agency can help you navigate through this entire process. Once you are finished, you will be able to grab the keys to your new home and you are new homeowners!