When you make an offer to purchase a property, your real estate agent will prepare the document for you. It is necessary to keep in mind that this is a legally ending agreement. In addition the terms of your offer including the timeframe for specific performance will be outlined.
This is an excellent time for you to review with your loan originator a realistic expectation of the loan process. A conventional loan with a 20% down payment can be closed more quickly than an FHA, VA or USDA loan.
The three dates that need to be monitored will be:
1. The date for any inspections
2. The dates for your financing approval
3. The date for closing
Let's address each of these individually. The date for any inspection is generally within 10 to 14 days of contract acceptance. During this time frame you will want to have the home inspected by a reputable home inspection firm. These inspections are critical in helping to identify any potential problems or maintenance issues with the home or systems. Generally the fee for this type of an inspection will depend on the size of the home. This is money well spent and highly recommended.
The financing contingency date is established as the deadline for your financing to be approved. Again you want to have enough time for your mortgage lender to all of your documentation received the appraisal, title work, verifications for employment, rent, IRS tax filings, etc.
The last is the closing date. While most loan officers do everything possible to meet those closing dates, on occasion there may be a delay outside of our control. It is necessary for you to keep that in mind as you establish your preference. You should also consider the amount of prepaid interest you will pay based on your closing date. Let me explain, prepaid interest is calculated from the date of closing through the end of the month. If you were to close on January 16, you would pay 15 days of interest. Your first mortgage payment will be due on March 1. This is because mortgage interest runs in arrears. So when you make that mortgage payment on March 1 you are actually paying the February interest. As you can see by this demonstration the later in the month you close, the less you will pay in prepaid interest.
As always you should consult with your licensed mortgage professional for guidance on your specific situation.
For more information about purchasing a home please see the other articles written on this subject, the links are listed below.
Buying a Georgia Home in 2012 - Let's Talk Assets
Buying a Georgia Home in 2012 - Let's Talk Rent
Buying a Georgia Home in 2012 - Step One - Where Are You Spending Your Money
Buying a Georgia Home in 2012?
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