- (60-40 Days From Closing) The
Pre-qualification Process
- (40-30 Days From Closing) Make
The Offer To Purchase
- (30-25 Days From Closing)
Acceptance Of The Offer
- (25-5 Days From Closing) Meeting
All Deadlines
- (5 Days From Closing) Last
Minute Details
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| 1. (60-40 Days From
Closing) Begin The Pre-qualification Process |
| This is an excellent time
to begin the pre-qualification process. Pre-qualifying can mean
several things depending on the lender that you choose, but generally
it involves knowing the following points- the area you want to live,
the type of home you want, and the loan best fits your financial
needs. |
| Many
lenders will pre-qualify you for free. A simple call, with no
obligation will allow you to know the type of loan that is best for
you. There are hundreds of loans available, so you should know your
best options. The lender will also ask if they can pull your credit
report. This report will alert the lender to any problems. If you've
experienced any financial difficulties (many of us have), you should
explain that to the lender so they can provide the best alternatives
for you. Next, the lender will most likely ask you a number of
questions regarding other things about your life such as employment
history, saving habits, marital status, ownership of additional
properties, and many other questions to help them determine your
ability to repay the loan. This is standard procedure in the mortgage
process, so please don't be alarmed. |
The following are some
additional questions a lender might ask:
Are you a first time homebuyer?
-A first time homebuyer has not owned a home in the last three
years or is a recently divorced homemaker. Why is this important?
Because there are many programs that require a lower down payment,
provide a lower interest rate, or even provide down payment and
closing cost assistance to new homebuyers.
Are you a Veteran?
-Many Veterans qualify for a special VA loan that requires no
down payment! In most cases, it is easier to qualify for a VA loan.
So, why not use this special benefit?
Becoming pre-qualified is an important step in the mortgage process to
enable you to get into the right house with the right terms and
conditions. Furthermore, getting pre-qualified helps you strengthen
your position when negotiating with the seller as they now know that
they have a qualified borrower.
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| 2. (40-30 Days From
Closing) Make The Offer To Purchase The House You Want |
Now you have found the
property you want and you are ready to make an offer. You must
consider what sales price to offer, terms, seller concessions, earnest
money, option fee, as well as closing and possession dates.
- If you are in a sellers market, you
will be able to negotiate very little.
- If you are in a buyers market, you
will be able to get several concessions from the seller.
Keep in mind that a very low
initial offer may anger the seller and can lead to a no compromise or
a refusal to work it out
This is a process that can be best accomplished with the help of a
competent and trusted Realtor. If you don't have one, a good person to
ask is your loan officer as they regularly work with Realtors and can
give you their recommendations. The Realtor is also very important
because they should always have your best interests in mind when
negotiating with the seller. This allows them to stay objective
throughout the process even when you become emotionally involved.
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| 3. (30-25 Days From
Closing) Acceptance Of The Offer |
Acceptance occurs when all
parties agree to the price and terms of the
contract. At that time, the clock starts ticking to adhere to all details
that are out lined in your transaction. You should be sure that all
changes are initialed, no matter how insignificant you feel the change
is. Absolute agreement and clarity is the key to protecting your
rights and expectations for your purchase.
This process is stipulated in your contract and should not be more
than five days total from the time you submit the offer to the seller.
It is important that this process moves along quickly. Once acceptance
occurs, the next 25 days are filled with inspections, appraisals, and
many other deadlines that you will need to stay on top of to ensure a
smooth closing.
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| 4. (25-5 Days From
Closing) Meeting All Deadlines |
At this stage of the loan
process, you may experience the stress of deadlines. Remember that you
have chosen competent and capable people who are working for you to
ensure that this will be a smooth process. If at any time you don't
feel 100% comfortable with anyone in the loan process, you should ask
another party for consultation. Remember that you are spending a large
amount of money and should feel completely comfortable with the entire
process. Below is list of some of the things that will happen during
this time period.
OPEN TITLE
After all parties have agreed to the terms of the contract and the
executed date is filled in, a copy of the contract and the earnest
money must be delivered to the title company. The title company, a
disinterested third party, must remain neutral throughout the
transaction. They will carry out all the instructions of your contract
and provide the title insurance. The address of the title company
chosen will be on your contract, so you can communicate freely with
them. Generally, your real estate agent will contact the title company
for all key factors and they will review your final figures before
closing. A good real estate agent can review the HUD-1 (closing
statement) and make sure you have not been incorrectly charged.
GENERAL INSPECTION
As stated by the Texas Real Estate Commission, you have the right to
do inspections anytime prior to closing. Most buyers choose to get the
property inspected during the option period. In case there are
problems found, the buyer can terminate the contract. The option
period begins on the executed date of the contract and normally lasts
from 7 to 15 days.
If you feel there is a major item that must be addressed after the
general inspection is done, you can:
- Terminate the contract within the
option period.
- Propose a lower sales price.
- Request the seller do the named
repairs.
- Split the cost with the seller.
TERMITE INSPECTION
If you are getting a loan, a wood destroying insect report will be
required before closing. This report is filled out by a specially
licensed inspector and is often done at the time of the general
inspection to keep inspection costs down. If you order the general
inspection with the termite inspection at the same time, you'll most
likely save yourself a trip charge. This inspection report states if
there is a current infestation, there has been infestation, there are
conducive conditions (areas that might attract), or the property has
been treated. Please keep in mind that infestation is easily
treatable. To view a list of inspection services in your area, please
see the Professional Services section.
APPRAISAL
The appraisal is required by the lender to insure the property's
market value and to certify the property meets required standards. Two
important areas to focus on are the appraiser's value and the
lender-required repairs. Although the appraisal belongs to the lender,
you typically pay the cost as required by the lender. Federal law
entitles you to a copy of the appraisal. To view a list of appraisal
services in your area, please see the Professional Services section.
LOAN APPROVAL
After the underwriter has reviewed your file, they will approve and
send it to the closing department. Loan approval is the full and final
approval to get your property closed. Sometimes the loan approval is
conditional and you must provide documented proof that either your
previous home has closed or a receipt of a paid account. Either way,
the loan approval moves you one step closer to owning your property.
One major factor that lenders consider when approving your loan is
your credit score. For additional information on credit scores, please
see the Frequently Asked
Questions section. This is also a good time for you to Compare Your
Lender and see if you are getting the best deal.
REPAIRS
All repairs are generally done after the loan approval. Sometimes a
seller might agree to do them early, but don't expect this until you
have been completely approved for the loan. Repairs include
lender-required repairs that must be done prior to the funding of the
loan. Lender required repairs take precedence over all repairs,
because the loan will not be approved unless they have been completed.
Although the required repairs discussed are addressed in the contract,
repairs that are needed after you are a homeowner should be a concern
to you. Savvy real estate consultants should always recommend a
residential contract to protect you in the coming year.
RE-INSPECTION
After repairs are done, it is always recommended to re-inspect the
property. Oftentimes, the general inspector you originally hired will
look over the work for a nominal charge. This re-inspection trip
should not be skipped. Allow yourself enough time before closing for
the re-inspection of items where repairs had been requested.
HOMEOWNERS INSURANCE
Before closing you must obtain homeowners insurance. You will need to
provide your insurance agent with the address, square footage, and age
of the property. Some insurance companies ask for additional
information that can be provided by your real estate agent. Your
insurance will not go in effect until your loan has closed and funded.
Your insurance premium will be included in your closing costs, so make
sure you don't pay for it up front.
SURVEY
A survey will provide a graphic account of the property you are
purchasing. It will show the structure fence line, boundary lines,
encroachments, and easements of the property. The buyer customarily
pays for the survey, but the cost can be negotiated if the property
includes acreage.
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| 5. (5 Days From
Closing) Last Minute Details |
During these final five
days you will need to finish up any last minute details to ensure that
you get the keys to your house the day of closing. This is an exciting
time, so try to relax and enjoy the process knowing that your new
house is just around the corner. Below are a few last minute things
that you will encounter.
CLOSING
Closing is the date and time set-aside for you to come in and sign the
paperwork. Your real estate agent will coordinate the time and date
convenient for you and the title company. As a buyer, you may want to
close near the end of the month, so that you will minimize the number
of days you must pay pre-paid interest. The other consideration is
that most closings are scheduled for the last day of the month. The
overcrowding and large volume of closings can lead to mistakes and
rushing of the documents. A wiser strategy might be to close three
days prior to the end of the month.
FUNDING
Funding occurs when all papers have been signed and all conditions
have been met. Funding may occur on the day of the closing or on the
next day. Careful planning will ensure that all expectations have been
met. You will not receive the keys for the premises until the loan has
funded, so plan to close early when there are definite time
constraints.
POSSESSION
After funding, your real estate consultant will give you the keys to
the property and you will officially own your new home.
Congratulations!
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