You found the perfect house, your agent has negotiated on your behalf, and both sides have signed the sales contract. Now what? Over the next twenty-five to thirty-five days your agent will guide you through the stages of contract to close. Most lenders need around thirty days to process the loan documents and prepare for closing. If you are paying cash you can typically close with in 10-15 days. The following is typical of what you can expect when closing on a house with a mortgage loan.
Option fee and Earnest fee
Once you have signed, you will need to deliver the option fee to the seller and the earnest fee to the title company. This is due immediately. Your agent can assist by providing the addresses and often will acquire a overnight shipping label from the title company for the earnest check. Time is of the essence for fee delivery so be prepared to access this money as soon as the contract is executed.
After you sign, your option period begins. It is important for you to know when your option period expires because this deadline is strictly enforced by the contract. The option period is the buyer's time to consider the purchase and "Opt out of purchase" without losing earnest money. During option period it is best advised that you hire a licensed home inspector to do a full inspection of the house including an inspection for wood destroying insects as well as any additional amenities such as irrigation system, pool, spa, etc. After the inspection, you can discuss concerns with your agent and have your agent request repairs be made by the seller prior to closing. If any of the requested repairs will impact your decision to purchase the home, all negotiations need to be finalized before your option period ends.
When you review your contract you will notice that there are several deadlines given in the form of "number of days". Such as Seller's Disclosure, survey, HOA, deed restrictions, etc. Your agent is monitoring these deadlines and following up should specific information not be provided within the time agreed upon. Also note that the contract may have a clause that specifies what will happen if the information is not provided within the agreed upon time.
After the inspection it may feel as if everything just stopped. Your lender may follow up with you to provide additional documents. After the inspection, your lender will most likely request the property appraisal be completed. This is required on most lender loans. While you wait for the third party appraiser to complete the order, you can follow up with your lender to make sure all documents have been provided from you. Your agent will be monitoring your finance approval deadline and following up with your lender. This deadline is also important to protect your earnest money should something prevent you from closing. You should also be checking on home owner insurance rates, and this is a great time to begin packing. Once the appraisal is completed you will be notified of the outcome and you can request a copy from your lender.
An appraisal is required on most lender loans. This is paid for by the buyer but the appraiser is hired by the lender through a management company. The appraiser's job is to determine if the home's value meets or exceeds the amount the bank is loaning. There may be various stipulations based on the type of loan you are using as to what value this must be to receive the full loan amount requested. One you receive the report, your lender will inform you of any changes that need to be made. Often you will hear the phrase, "property met value" or "property did not meet value". A property meeting value needs no further action. A property that does not meet value may require more action depending on your situation. Your agent and lender can explain your options in this situation.
All Conditions are met
Once all conditions are met the title company and your lender will finalize their documents for closing. They must compare documents to make sure they match and then you will be sent a copy to review prior to closing day. Be sure and be on the lookout for any documents sent from your lender. Some loans require you to review documents a minimum number of days before you can sign closing documents. Acknowledging you received the documents from your lender may be time sensitive. Ask your lender if you have a review requirement on your loan.
Once all reviews are complete and the title company and lender are ready, you will be given a clear to close. Your agent will have already scheduled a time for you to close on your contracted close date based on your preferences. You will be provided with specific details as to what to bring to closing, where to meet and the time to arrive. Once you are at the designated closing location, usually the title company, you will meet the escrow or closing officer. He or She will explain all your closing documents as you initial and sign. Once both parties have signed, the title company will request the funding from your lender. Once funded you are fully closed. Your agent will be notified you have funded. your agent will contact you to transfer your keys of your new home to you. Congratulations, your a home owner!