Sign Loan and Escrow Documents
If you cannot physically come to the escrow company, the escrow officer may send a mobile signer to you. You will probably pay extra for this service but for many buyers, it is a beneficial service. Mobile notary signers will come to your home, office or any other place you designate.
- As with many other aspects of the home-buying process, procedures for escrow vary by locality. For instance, In southern California, you will sign escrow documents shortly after opening escrow; in northern California, you will sign escrow documents along with your loan documents near closing.
- Bring a valid picture ID. Make sure the name on your ID is the same name as on your loan documents. If you’ve recently married and changed your name, this could cause a problem.
- Be prepared to spend at least 30 minutes to an hour signing loan documents. You will probably be presented with at least 100 pages to sign.
Deposit Balance of Funds
This is where the rubber meets the road. Now that you have checked out the home to ensure it meets your expectations and your loan is ready to close, this is when you deposit the rest of the down payment and closing costs.
- Bring a certified check payable to escrow. You cannot deposit cash nor a personal check. Personal checks are acceptable if there is adequate time to clear prior to closing.
- Expect escrow to pad the amount, so you will receive a refund after closing. Escrow can mail you the check or wire the refund to your bank.
- Consider asking your bank to wire the funds directly to escrow, saving you the hassle of physically delivering the cashier’s check to escrow.
Escrow has closed when the title company receives confirmation from the Recorder’s Office that the documents have been recorded. If you and the seller have signed your escrow and loan documents before 3 pm. you can get possession that day . If it’s not by 3 pm. then it will be the next business day.
- Your property deed, seller’s reconveyance and deed of trust will record in the public records. Later, weeks after closing, you will receive the original deed in the mail.
- The title company will notify your agent when your transaction records, and in turn, it is common for your agent to call you. Many agents are very excited when it’s time to hand over keys on the doorstep to you.
- After recordation, unless your contract specifies otherwise, the property is yours. Change the locks immediately, and enjoy your new home!
Do Final Walk-Through
The purpose of the final walk-through inspection is to essentially ensure the property is in the same condition as when you last viewed it. If you discover exposed damage to the hardwood floors, for example, after the seller has removed furniture or removed rugs this is the time to ask for some sort of compensation.
- Do not pass up doing a final walk-through. You might be tempted to forgo this formality, but those who choose that option often regret that decision. You can learn from your own mistakes but learning from others is far preferred.
- Make sure toilets flush and there is no water leaking from the removal of the refrigerator or washing machine. Turn on all lights, operate all appliances.
- Inspect the property to make sure it’s in the same condition as when you agreed to buy it. This is not a license to demand more repairs unless you find a new defect not previously disclosed.
- If you find a serious issue, address it now before you close. Due to the urgency of some situations, you might find a fast solution that will not hold up closing. Try to avoid financial arrangements that could change your closing disclosure or your loan docs could need to be redrawn.
In most states, the purchase contract gives a buyer a certain number of days to conduct inspections, including a home inspection. You might also consider a pest inspection, chimney inspection or sewer inspection. If you uncover a major defect that you cannot accept, you are often free to cancel the contract.
- Hire a reputable home inspector. Not every state requires inspectors to possess any licensing or credentials. A home inspection is for your education and is not a laundry list to present to the seller to repair.
- Bring a home inspection checklist with you. You will want to make sure every area of concern has been inspected and your questions addressed.
- Attend the home inspection. Do not follow the home inspector around, like a Zillow book wrongly suggests, or the home inspector will silently curse you under his or her breath. Let the inspector do the job of inspection in peace. Wait until the home inspector is finished before asking questions.
Consider a Request for Repair
The seller is not obligated to fix anything, not even lender required repairs. Some appraisals might contain what is called “conditions,” which are defects of some sort that need to be corrected before the lender will fund the loan. Either party can take steps to satisfy loan conditions, this is negotiable.
- If the home inspection turns up significant and unexpected problems, you can sign a request for repair by asking the seller to either address those issues, give you a credit toward closing costs or lower the sales price. Realize the seller might say no and determine whether you can live with that kind of response.
- Realize no home is perfect, and the inspector will find faults. Don’t expect everything on the home inspection report to be fixed nor allowed for in the sales price.
- Be reasonable. I know this is a tough one because it’s subjective to some people, but being reasonable means making rational inquiries. Your agent can guide you.
Not every listing agent will ask for a release of contingencies, but those are the lazy agents. To fully protect a seller, most listing agents will demand the release of all contract contingencies by the date those releases are due.
- The contingencies do not expire at the end of a specified time period, contrary to popular belief.
- Try to make sure your loan is firm and the appraisal is acceptable before removing your loan contingency. If your lender can’t confirm your loan, you might still need to remove the loan contingency, if you are contractually obligated to.
- If you refuse to remove contingencies, the seller can issue a Notice to Perform and then unilaterally cancel the contract.
Order Homeowner’s Insurance Policy
You might start with the company that insures your automobile. Sometimes insurance companies will give you a discount if you maintain more than one policy with that company. In addition to homeowner’s insurance, you might also consider flood insurance or earthquake coverage.
- Order your homeowner’s insurance early. As mentioned earlier, not every insurance company will insure every home, especially older homes or homes located in hazardous places.
- Sometimes previous claims by a homeowner can make it difficult to get insurance. A C.L.U.E. report will disclose previous claims and can be obtained online for about $20.
- Get replacement coverage. It doesn’t cost that much more to obtain replacement coverage, which will rebuild your home if it is destroyed. Sadly, many victims of wildfires did not carry replacement coverage.
Acknowledge Receipt of Seller Disclosures
Sellers are required to deliver certain disclosures about the property to the buyer within a particular time period specified in the purchase contract. It is the sellers’ obligation by law to reveal everything a seller knows about the property, including material facts.
- Read and question items you do not understand on the Seller Property Disclosure, natural hazard report, pest inspection/completion and other documents such as a preliminary title policy.
- Realize you have 10 days to review for lead-based paint, which is a federal disclosure.
- Read every document in its entirety; ask questions about all seller disclosures. If you encounter unfamiliar terminology, and few buyers understand every single term, ask your agent to explain it to you. There are no dumb questions when buying a home.
Comply With Lender Requirements
Your loan file is huge. It contains your loan application, credit report, last two years of tax returns, payroll stubs, W2s, copies of bank statements and other financial documents, in addition to state- and federal-mandated forms.
- Lenders may ask for additional information. Do not balk or complain. They don’t write all of the rules, underwriting has the last word. It could be the difference between getting the loan or not getting the loan.
- Do not make home buying mistakes such as altering your financial situation while in escrow. Please do not make any major purchases or acquire any additional debt. It can stop you from buying a home.
- When the file is complete, the lender will submit it for final underwriter approval. Being in underwriting is nerve-wracking and frustrating, especially when it takes longer than 24 hours, but it could take a week.
Obtain an Appraisal
Most purchase contracts contain a provision for the appraisal, making the appraisal a contingency of the contract. This means if the home does not appraise for the amount you offered to pay, you are not obligated to complete the transaction. The lender will order the appraisal.
- Your lender will require an advance payment for the appraisal. Every so often, a lender will, as a promotion or incentive, agree to pay for your appraisal. Ask about it.
- If you receive a low appraisal, discuss options with your agent. As a buyer, it is natural for you to want the seller to reduce the price, but that might not be the only solution.
- Ask for a copy of the appraisal. If you paid for the appraisal, you are entitled to receive it.
Open Escrow/Order Title Commitment or Prelim
The escrow officer will prepare escrow instructions. The exact process here varies by locality — for instance, in southern California they are signed upon inception, while in northern California are signed at closing. The escrow officer will act a neutral third party to process your transaction by collecting or preparing documents, obtaining signatures, recording documents and disbursing funds.
- Your agent or agent’s transaction coordinator will open escrow and title, if the listing agent hasn’t already done so.
- Ask for the escrow officer’s name, phone, email, and escrow file number. Escrow officers are bound by confidentiality.
- Give this information to your lender and your insurance agent. Get an early start on obtaining quotes for a homeowner’s insurance policy .
Make an Earnest Money Deposit
Purchase contracts typically contain a good faith deposit, called an earnest money deposit. It shows a buyer is committed to the transaction when a buyer is willing to place a deposit into escrow. Most earnest money deposits are refundable.
- When your offer is accepted, deposit your earnest money check with the appropriate party. Ask your agent who the check gets made out to, it usually goes to the buyers agent brokerage.
- Do not ever make your check payable to the seller. I don’t care what anybody says, do not pay the seller directly.
- Your offer should contain contingencies ( inspection or financing etc. ) that will return your earnest money deposit to you if you cancel the contract. Usually, the contingency periods will specify a time period for performance.
Negotiate Counter Offers
It is considered normal for a seller to send a counter offer. It doesn’t mean your offer offended the seller or that your agent did anything wrong. Some sellers issue a counter offer because they like to have the last word.
- Expect the seller to issue a counter offer. Even if you offered list price, the seller might have other points that were not adequately addressed to the seller’s satisfaction in the offer. A counter offer is not the kiss of death; think of it as the gateway to acceptance.
- If the seller counters at full price, continue to negotiate. Even if you offered less initially, you might find that continued negotiations could result in the final offering price that is acceptable to both of you. The first counter is not always the last.
- During offer negotiation, share personal information about your family to give the seller a reason to care about you. Especially if there are other offers, you will want to put your best foot forward and have your offer resonate with the seller on a personal level. No matter what, home sales are emotional and personal.