Congratulations! You have found your home! Now for the fun stuff. The closing process will be extensive and at times to be emotionally challenging. The following are steps you will need to accomplish and will help minimize some of the stress
Step #1: Hire a home inspector:
Typically a Purchase Agreement allows for a buyer to perform as many inspections on the home. During this period, a buyer should take the opportunity to have the home thoroughly Inspected for any defects or major concerns. A Buyer’s Realtor should make it a point to be on-site to discuss the inspection findings with the inspector and the buyers.
The inspector will forward the report to the buyer after receipt of payment for the inspection. The Buyer and their agent would need to look over the report and discuss the next steps. If a Buyer is using a VA or other government secured loans (FHA, USDA, RD, etc.), inform the inspector at the time of scheduling the home inspection. Often times the loan program(s) have special requirements that will need to be met, i.e. Water Test, Pest Test, Septic Inspection. In many occasions an inspector could perform these inspections simultaneously with the home inspection.
When discussing the home inspection with a Buyer’s Agent, ask which home inspection items should be a cause for concern during an Appraiser’s observation report.
Step #2: Coordinate the appraisal process with the lender. Often times a lender will wait to order an appraisal until the home inspection contingency has been satisfied; ensuring the home purchase will move forward. Appraiser is chosen from a third-party system. A lender will submit a request for an appraiser. The lead time for an appraiser, before the initial visit, is anywhere between 7-10 days. Once the appraiser has completed the observation, a report will take an additional 7-days +/- to be complete and submitted to the lender.
Step #3: The lender will require a copy of Tax Returns, Pay Stubs, Bank Statement and any other documentation to support the requirements for a home loan. Have the documents readily available to help ensure a smooth process with reduce stress.
Step #4: During the closing process, shop around for a home insurance policy - State Farm, All State. Farm Bureau, etc. Finding the best rates and terms will have an impact on your monthly loan payment. The lender will be paying the home insurance provider directly from a portion of the monthly loan payments.
Step #5: Schedule the transfer of services at the new residence. The Buyer’s Agent will be able to assist in collecting the necessary contact information to transfer services (Electric, Gas, Water, and Sewer) into your name on the day of occupancy.
IMPORTANT: During the closing period it is VERY important not to take on additional debt or charge any unnecessary purchases on credit cards. The lenders will be pulling your credit report once more prior to the closing date, to insure you did not increase your debt-to-income ratio beyond the expected threshold cost of your mortgage payments.
Also, if you have paid off debt during the closing period, your creditors may not have updated the credit reports. The mortgage company could ask for proof of the paid off debt to assist them in approving your loan more quickly. Have ready statements or written and dated documentation indicating the paid off debt.
Third Party Responsibilities:
As a buyer, you will want to get the purchase offer, as well as any other supporting documents to the lender. Follow-up with the Lender’s Loan Originator to insure you are addressing the necessary steps during the closing process. Verify and understand the lender's internal process of managing and approving your home loan request.
Typically, the Loan Originator will collect all the necessary documents. Once all documents are collected, the Loan Originator will forward to the Loan Processor. The Loan Processor (or similar) will ensure all the paperwork is in working order and once the home inspection is complete, will order an appraiser through a centralized registry containing a list of qualified and certified appraisers.
The lender does not have a choice of an appraiser to use. The Appraiser will generally contact the listing agent directly for access to the home. If the appraiser has any questions, he/she would contact lender and in turn the lender would contact the Buyer’s Agent – with permission from the Buyer. After the appraisal comes back "Good", the Loan Processor would forward to Under-Writing.
A few days prior to closing, Under-Writing will pull your credit again and send you closing documents to review. When you receive/review the documents, immediately contact the Lender. If there are issues with the documents or you have questions, do not hesitate to call your lender.