For quite a few home buyers, the closing day for a real estate purchase is as formal and complex as the transaction itself. For others, it’s simply a blip on the radar. In any case, there are a few significant things to keep in mind as you head to home-ownership.
5 Things to Understand While You Wait for Closing Day
Your interest rate could expire
Mortgage interest rates can fluctuate daily, and the rate your bank quoted isn’t good forever. Instead, a bank will “lock-in” your rate of interest for 45, 60 or any number of days. Once that lock expires, you might need to pay a higher rate.
Any number of issues may come up: open permits, illegal renovations, or other kinds of roadblocks may need the loan process to stop until resolution.
For example, a consumer in upstate New York learned at the eleventh hour that a previous owner built an addition to the home in the 1970s but never documented it properly. As it turns out it was so bad that it wouldn’t pass today’s requirements. The purchaser had to hire an architect, re-draw plans, and document the problem prior to the bank approved the loan. And, consequently, he lost the rate he’d been quoted.
Don’t wait until it’s too late, and don’t assume it’s a smooth journey to the closing table. Rate-lock expiration can throw an expensive wrench into the closing process.
The mortgage process isn’t over yet
Some buyers think once they’ve completed the application form and submitted paperwork, their loan is approved and ready to go.
Not so fast. Today, some lenders will verify income, assets or credit all the way till the final minute. Don’t make any major changes to your finances up until the closing.
Which means don’t apply for a new charge card, finance a new car, or take a new job without running it by your mortgage professional.
The smallest (even seemingly insignificant) alteration to your finances can affect your ability to be approved for a loan.
And the house isn’t yours yet
In some locations, the walk-through can be a formal event, and in others, it’s a checked box. Most real estate contracts provide for a walk-through up to 24 hours prior to the closing. Take advantage of it.
Why? You don’t wish to close on the home if systems aren’t working, the seller hasn’t made the necessary repairs, or the seller hasn’t moved out.
If things aren’t as they should be, you are able to postpone the closing until they are.
You may need to perform a little homework
Once the home closes, not only is it physically yours, but additionally it’s completely your responsibility. In most states, the law is on the side of the buyer, and requires the owner to reveal any issues and ensure they’ve been resolved.
In others, it’s “caveat emptor,” or buyer beware. In this case, it’s up to the purchaser to double- and triple-check that the seller closes all outstanding building permits, releases all liens from the title report, and resolves any problems with the local building department, assessor or health department.
The actual closing may be very low-key
In most places, the end happens in parts, and the two parties don’t need to meet. Buyers sign their loan documents in the privacy of their home or office, and the seller shows up at the title company to sign off on the deed. It’s seamless and simple, and occurs in the background. Buyers wire their down payment, and sellers receive their funds electronically.
But sometimes, the sellers and buyers and several attorneys and title folks sit around the table for hours, passing paperwork and using calculators. The process is archaic and cumbersome. What’s worse: When the transaction wasn’t smooth, the climate around the “closing table” may very well be pretty tense.
What can you do?
The easiest way to a smooth closing is to be on the lookout for warning signs and do a great deal of research.
Have a solid team on your side, starting with an excellent local agent. Nick & Cindy Davis can recommend necessary mortgage pros, title insurances, escrow offices, attorneys or inspectors.
Processes and customs vary by market, and customs that apply in one community won’t matter throughout the country, so getting the maximum amount of information upfront as you can will help avoid unpleasant surprises.
So if you are ready to get started, give us a call at 813-300-7116 or simply click here and we will be in touch.