You found your new home, the seller has accepted your offer, and now what? You want everything to run smoothly and efficiently, so that you can close on time and with minimum hassle, effort or worry. When you understand what happens between offer acceptance and having the keys in your hand, you can relax knowing all the professionals are now playing their part. Achieving that smooth closing takes three things:
You do your planning by deciding where you want to live, what kind of property you want to live in, and determining how much you can afford to pay. You work with an expert loan officer to get pre-approved for your mortgage, so you know the offer you make will be taken seriously. You choose a realtor who knows the area you want to live in and has a good track record when it comes to buyers and negotiating the best terms, which falls in line with doing your part when it comes to combining planning with professionalism. Now let’s explore what happens from here.
Professionalism and Cooperation are Critical
From now on, every action and decision is governed by the agreed upon terms and conditions. Each action must be completed by the agreed date. The purchase contract states what the seller’s and buyer’s rights and responsibilities are. As the buyer, you will rely on your realtor and loan officer to work with the closing company to make sure everything is done on time.
A Simple Timetable to Work to
- The signed contract must be received by both parties and given to the closing officer and loan officer within a day or two.
- Your loan officer will prepare a TRID (TILA-RESPA Integrated Disclosures) so you know all of your costs and expenses associated with your purchase. This should be ready within three days.
- The loan officer orders the appraisal. The home must appraise for at least the agreed purchase price, so your loan can be finalized. If it does not appraise, then the price will need to be renegotiated. Appraisers are very busy, so it can take several days for the work to be done before the report is prepared and delivered. This is one reason for choosing your realtor carefully. If they know the local market, they will know the home’s expected market price. Appraisals can take a minimum of 10 to 15 days.
- The contract will allow a certain number of days for inspections to be carried out and repairs to be agreed. If you are approved for a VA or FHA loan, the appraiser can require certain repairs to be done as well as your professional inspector(s). Your realtor will keep you informed on timescales and progress.
- Your and the seller’s realtors work together to arrange inspections and repairs within the approved timescales.
- After the appraisal is done, the survey will take place. With enhanced title insurance, surveys may not be necessary, but seek advice before you decide not to have one. Your loan officer will order them at the same time, but there is no point in paying for a survey if the home doesn’t appraise out. The survey will be done soon after the appraisal.
- During this time, your loan officer delivers all lender instructions to the title company, stating what must be completed for the mortgage money to be paid to the seller.
- When you know the appraisal and surveys are satisfactory, arrange for homeowner and hazard insurance through your insurance broker. The broker will liaise with the lender and title company.
- The title company will perform appropriate searches so new title insurance policies for you and your lender can be prepared. This can take anywhere up to 15 days, depending on the property under contract.
- The closing documents are prepared and issued just before the closing date. You may wish to review the documents before signing, so plan ahead and make an appointment with your closing and/or loan officers, so they can allow time to meet.
- Before closing takes place, make sure you know how much cash you will need, how it should be passed to the closing company, and by when.
- Either attend closing in person or arrange for all documents to be couriered to you for signing in front of a pre-approved professional and the couriered back to the closing company.
There is a lot to be done before you get to closing. Some actions happen simultaneously, and some follow from a previous action. The actual time everything takes depends on the planning and cooperation we mentioned. The timescale for all work to be done, therefore, must allow for processes to be completed correctly. The final deadline is set by the contract, so most closing dates are set between 20 and 30 days from contract signing.
What Causes Delays?
Mistakes and poor planning cause most delays. Some delays are caused by a title search, for example, discovering a problem no one knew about. This list states some of the most common delays:
- Not applying for a mortgage soon enough, and not receiving a pre-approval letter.
- A buyer going out and increasing their debt (e.g. buying furniture for their new home with credit) resulting in action required to fix the debt-to-income problem.
- A low appraisal may require the contract price to be renegotiated. Until a new contract exists, all work stops.
- Failing to arrange homeowner or required hazard insurance in time, or where the insurance broker fails to provide the required proof of coverage.
- Problems with the property’s title, discovered by the title agent, will have to be corrected before the new title insurance can be issued.
How to Avoid Delays
Most delays result from poor planning and poor cooperation. As the buyer, you want to choose professionals with good track records, who also know who they will be working with. Experienced realtors, loan officers, and title agents are more likely to know each other and how to work with each other to achieve success smoothly, efficiently, and on time. You can begin your journey to a successful closing by getting pre-approved for your mortgage by just contacting me, your home loan expert today!