- Navigate Through “Thumb Twiddling Time” Until Closing
Once a home is fully under agreement, there is about a 45-60 day period between Day 1 of a fully executed and initialed Agreement of Sale and the closing date. The first 7-15 days are generally a flurry of activity for you, the buyer. These are primarily occupied by inspections and loan application. Once the inspections are out of the way, and the loan application is made, there generally occurs a period of 2-4 weeks in which you seem to be doing nothing. Yet, much is going on behind the scenes.
Thus, for you, much of your time seems idle. That is why we have come to call this period in the process “Thumb Twiddling Time”.
It often helps to look at the home purchase as if it were a Broadway play being acted out in real life. The Agreement of Sale is the script. YOU, the Buyers, are the stars. The Sellers are supporting characters. However, the players list does not end there. Just as with any theater production, there are numerous people, both seen and unseen, that impact the quality of the visible production.
By the time “Thumb Twiddling Time” has begun, you will already have met the loan officer, as well as your inspector(s). Both are very visible and critical players in your production. Indeed, they are significant supporting “co-stars”. Here is a partial list of behind the scenes participants.
Underwriter
Once you have made loan application, the approval process begins. The “underwriter” is the collector of much, if not all, of the information that has been presented about you ( income, tax returns, employment history, etc. ) AND the property ( appraisal, flood certificate, quality of title, etc.). The underwriting team analyses all the information before finally producing a “loan commitment letter” for you which says, “Congratulations ! We will loan you the money…..”.
Title/Closing Company
Also, there is a closing/title company that researches the title to the real estate. They generally prepare/collate all the documentation you and the seller will sign for the closing. Often handled by a lawyer ( we STRONGLY recommend that your closing be handled by a closing LAWYER ), it the title/closing company’s job to insure that the title is “good and marketable” for you.
Appraiser
The appraiser is hired by the lender through a third party known as an “Appraisal Management Company”. Armed with the actual agreement of sale for the subject real estate, the appraiser visits the home and prepares a report that compares the subject home to sales and other listings of comparable homes in the neighborhood. Ultimately, the appraiser presents an “opinion of value” within the appraisal report that is then provided to the underwriter.
Surveyor
A surveyor is someone licensed to present varying types of written visualizations of “what is in the deed” relative to real estate. 99.9% of the time, a survey is not “required’. The lender does not require one. The title/closing company does not generally require one.
That said, it is an EXCELLENT idea for you, the buyer, to have one done anyway. As the saying goes, “you just never know”. For the typical cost of $400-+/-$1000, you can have a survey done, in your name, that depicts the metes and bounds of what you are purchasing, as well as a written depiction of the house and yard improvements.
Various Municipal Employees
This group is perhaps the most under appreciated, yet significantly impactful group, relative to ultimately closing on your home. Depending on what municipality in which your home sits, there may be a municipality ordered building inspection, dye test, etc. Also, it is from these entities that final “no lien” certificates are presented to the title/closing company. These letters are critical to making sure that you, the buyer, are ultimately obtaining a good an marketable title.
- “Approach for Landing” to Closing
Usually about 7-10 days before the closing, you will have received the Loan Commitment Letter. In essence, it gives the final instructions to all involved as to what final details are required to finally make your home YOURS. Much like the first 7-15 days, this last 7-10 days presents a flurry of activity on your part.
It is very much like the time period between when the captain of an air flight gives the final notice of “Approach for Landing”. After having been gliding along for a while, it is time to put laptops away, put your seatbelt back on, re-set trays to their upright position, etc..
The underwriter will probably be asking for some last minute documentation. You will be given the utility company information so you can call to set up the transfer of the utilities to your name. The title company will be further verifying the clearance of title. Also, about a day or 2 before closing, the title company will have been given instructions from the lender. It is from these instructions that a final HUD-1 ( settlement sheet ) will be prepared and you will know your “final cash to close” amount.
A time and place will be set for closing. A walk through will be set up, usually right before the closing. There, you and your Praedium agent will walk through your new home, making sure it is in satisfactory shape at the time closest to when you will actually be signing on the dotted line. Assuming all is well, we will then head to the actual closing.
- Closing/Settlement
At this point, all the documents have been prepared and await your signature at the closing. The closing ( also known as the “settlement”) company meets with the sellers and buyers around a conference table at a mutually convenient office location. While you should be prepared to sign your names about 40-50 times, the major items for signature will be the 1) note, 2) mortgage, 3) deed and 4) HUD-1 / settlement sheet. Your Praedium agent will be with you to guide you every step of the way.
Once all the papers are signed and you hand over your certified “cash to closing” check, the keys are turned over to you and it is time to celebrate ! Congratulations on owning your first home!!
|
