Now that you have a fully executed (signed by both parties) purchase contract in your hot little hands, the clock starts ticking on the five day attorney review and inspection period. You have three days to get the earnest check (or cashier’s check) to the seller’s agent office. Yes, you may have to drive a thirty minutes depending on the location. I know, crazy right?! Some things are still old school in the real estate world.
There will be hiccups! There may even be some burps! There are a lot of moving parts to this one transaction. My goal is to make it as streamlined and easy-peasy as possible. You will get confused! You will wonder “what the heck is going on with my home purchase?” I, along with your lender and attorney will work behind the scenes, to make sure we get everything lined up for your target closing date. Watch your emails and texts. Respond quickly.
My role as your Realtor changes from searching homes to a transaction coordinator. I’ll be here doing “all the things” to minimize drama and sadly we won’t see each other as often. Yes, there could still be drama but I promise to help you breathe through it! Much like the nurse who helped your momma when she gave birth to you! Press your shoulders down and take 3 deep breaths…burn some incense and away we go…
As long as everyone does what they’re supposed to do (including you, soon-to-be-check-writing-bill-paying-homeowner we will have a smooth transaction. I will oversee this to the best of my ability but I’m only human. If you see anything funky please ask. If you wake up at 2am in a panic, DON’T message me. Kidding, yes please send it via email and I will respond when normal, non-home buying people are awake!
Need furniture? Need appliances? Need a car? Too bad, so sad Now is NOT the time to make big purchases! You will need to keep your credit squeaky clean until you have gotten a “clear to close” from your lender. No big dollar deposits or withdrawals from your bank accounts either. Borrowing money these days is all about paper trails so they will be closely monitoring your financial activities from here on out, otherwise you’ll have ‘some splaining to do Lucy!’
There are multiple types of inspections that you may need to schedule so you feel comfortable with this purchase. You will pay for each one as they are completed. A standard home inspection (approx. $400) is the most common. The inspector will look “under-the-hood” if you will. Keep in mind, every home will have problems. When the home was built, it was built according to the codes in place at that time. Building codes are constantly changing. It is not necessary for the seller to bring the home up to code. We are mainly looking for things that are a health/safety concern. Just about everything can be repaired, it boils down to how much $$$.
There may also be a need for radon (approx. $200) especially if the home has a basement and you plan on using the basement on a regular basis. Please google Radon and decide if it’s something you want to have inspected. Other inspections are pest (required for VA loans), septic, sewer lines, structural, HVAC, meth, and mold inspections.
When the report comes back, decide which items mean the most to you. I will help you through any questions you have. Ask friends and family (including Uncle Joe the family handyman) for their opinions and if they can help you fix any of these things. Tell them you’ll gladly pay them in beer/wine/cannabis..? You will make a list and discuss those items with your attorney. Your attorney will draft a letter to the seller’s attorney with a request to repair or replace those items.
It is the seller’s choice to repair or replace items (by a professional with receipts) you request. If you aren’t satisfied with their response to your requests, you can go back to them with a rebuttal. In most cases, you’ll have the option to cancel the contract if the repairs are too costly or not what you want to tackle. Remember, the seller has the same option. Decide how much you love the house and how much money you’ll need to fix the problem. If it’s worth it to you, you will find a way. Discuss with your attorney how you will proceed.
UNDERWRITING THE LOAN…..
Once this attorney review/inspection period is complete and you and the seller have come to an agreement, the mortgage lender will start the mortgage process for your transaction. The lender will ask for, what seems like, an obscene amount of paperwork!! Every time you turn around, a new document request or another signature needed. EYE ROLL. It’s extremely annoying! Especially when they ask for a pint of blood to prove your identity. You will wonder if it’s all truly necessary?! Kidding about the blood thing. Please understand that this is what it takes to buy a house when using financing. They need to cover their ‘ass’-et and at the end of the day, that’s all they care about. Harsh but true!
Make sure that you get the requested documentation to them ASAP to ensure all deadlines are met. Any delays could delay the entire process which could cost you extra money, or worse cause you to be in breach of the purchase contract. If this happens, it could be the reason the seller chooses to cancel the contract and keep your earnest money.
Snooze fest up ahead…this is boring stuff but it’s part of home ownership and you’re paying big bucks for it! The law office handling your transaction will request a title search on the home you are purchasing. This means they will review the title history of the property (chain of title) and tell you about any liens against the property that need to be resolved before closing. A title commitment is basically the title company’s promise to issue a title insurance policy for the property at closing. The title commitment contains the same terms, conditions, and exclusions that will be in the actual insurance policy.
Insurance such as car, life, health, etc., protects against potential future events and is paid for with monthly or annual premiums. A title insurance policy insures against events that occurred in the past and the people who owned it prior to you. It’s a one-time premium paid at the close. Depending on the policy, title insurance protects against claims from defects of title. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy.
Blah blah blah…make sure you review the document and ask your attorney for clarification.
Cha-Ching $$$ Once you have cleared the inspection process, and are ready to move forward with the purchase, let your lender know. They will then order a home appraisal to verify that the value of the home you’re purchasing is worth the loan amount that you are asking for.
The appraisal requires payment up front and therefore the reason it’s best to wait until you have gone through the inspection process so you know you have a solid agreement with the seller. You don’t want to pay for the appraisal and have the transaction fall through.
HOME OWNER’S INSURANCE…
Your lender will require you to have a Home Owner’s Insurance Policy on the property before closing. Shop around and choose the homeowner’s insurance provider and policy that works best for you. Check with your car insurance provider if you like them as they can usually bundle car and home insurance.
Home Insurance payments will be held in your escrow account and the lender will disburse those payments for you. Once you have the policy in place, let your lender know.
Home warranties are an option and can be an added layer of protection against major appliance failure. If you’re purchasing a home warranty, you’ll want to shop around and find the home warranty company that best suits your needs.
An escrow account (if you’re borrowing from a lender) is an account set aside by your lender to hold onto your property taxes and home owner’s insurance. The payment that goes towards your property taxes and the payment that goes to your home owner’s insurance are rolled into your mortgage payment (we call it PITI = Principal, Interest, Tax, Insurance) and are disbursed to pay these two payments by the lender.
Cookin’ with gas or electric? Time to turn them on! Now that you’re past all of the major steps required to purchase your home, you will want to get your utilities transferred into your name. Gas, electric, water, sewer, scavenger (if applicable). In the Summer months when the local real estate market is busy, you may want to do this at least a week before closing to make sure that they can process your request before closing.
MOVERS & STORAGE….
During busy Spring and Summer moving months you will want to arrange for movers as soon as you know your transaction is solid. Sometimes they are booked out for several weeks. Some people will ask the movers to store their belongings for a few days so they can paint and do other planned improvements prior to a full move in. If you plan on putting things in storage for a period of time, arrange that as well.
SCHEDULED TO CLOSE ….
We’re nearing the finish line! This is a big day so as soon as you get the email with your closing time and place, make sure you mark your calendar. Set it up in your favorite GPS app, and plan to be there 10 minutes early.
Make sure you have communicated to me, the lender and the attorney if you have work or family conflicts. Sometimes you have a choice as to the time the closing will occur, but mostly NOT! It’s just scheduled. You may need to schedule time off work, arrange for childcare, possibly tear yourself away from Tik Tok for sixty minutes. Buyers have to ink sign the mortgage and note.
I like to do a final walkthrough the evening before if it is okay with the sellers. The purpose of a Final Walkthrough is to verify that any repairs have been completed, that all of the seller’s personal belongings have been moved out, and/or to make sure that the home is in broom-clean condition. It does NOT have to be professionally cleaned btw.
This is not a time to renegotiate repair items on the sales contract. It’s simply a safeguard to make sure that no major issues arise that could cause the closing to terminate; which would likely be followed by legal proceedings to mitigate the issues. No one wants that but sometimes it does happen. Minor annoyances like finding a few burned out light bulbs during your final walk-through shouldn’t be cause for you to delay your closing.
CLOSING DAY IS HERE!!!!
Get a good night’s sleep the night before! On the day of closing, you will need to arrive at the title company 10 minutes early and have your driver’s license (or other approved photo ID) and certified funds (cashier’s check or wire transfer) for any monetary amount required from you at closing. Your lender will let you know the amounts. To prevent wire fraud, please be in direct communication with the title company before you click on any email links.
Your attorney will explain ALL of the documents you are signing. One at a time. All 30+ pages. They will seem to drone on for days and you may blank out at times, but WAKE UP, because this is important adulting stuff! Take notes for anything you need to know after the closing as this is an exciting time and you may not remember everything the attorney said. I recommend investing in a file or large envelope that is specifically used for stashing your home documents. Keep them in a safe place in your new home!
As the buyer, if you’re getting a loan, you will be signing the lion’s share of the paperwork, so get that John Hancock ready! Once the documentation has been signed and you here the words “we are funded” we all do a happy dance! You will be given the keys to your brand new home and now the real fun begins! Taxes and bills and repairs OH MY!
Oh and yes, this is when I get paid too which is certainly cause for celebration in my house! To clarify, if you see the amount on the check that I receive, don’t GASP. The check is made out to Keller Williams. Keller Williams deducts their portion and they issue a check to me for my share.
I want to thank you from the bottom of my heart for choosing me to help you through this exciting and yes sometimes mind-numbingly exhausting process of buying a home! It truly lights me up to help people so if you have any friends or family who are thinking of either selling or buying a home, please let me know! I’d love to help!