Contract to Close
From Contract to Close What to expect!!
By Search7Cites Real Estate Group
We are committed to representing you throughout your entire real estate transaction – from contract, through closing and beyond. This checklist is designed to make your journey a bit simpler. We will be here to guide you through each step along the way.
Escrow Deposit
Also known as an earnest money or good-faith deposit. These funds go with your offer to purchase a home or are collected within a specified time period after the contract is signed by all parties (Typically 3 days after the contract is executed). The deposit can be delivered through our new app called “Earnest” app. It is a simpler way of sending your deposit that takes less than 5 minutes to complete! Your agent will send you a link shortly asking that information, so please be on the lookout for that!
Inspections
Professional home (if we requested one) and termite inspections are valuable in order to determine the condition of a property you plan to buy. It is important to schedule inspections as early as possible, so reports and responses are completed well before the inspection deadline. Do not worry, we will schedule all of these for you! Once the inspection report is complete, we will review and discuss the findings with you. If the property is not being purchased as an as-is property, we will send a repair list to the seller and negotiate repairs to be completed. In some cases, even if the property is being purchased as-is, we can still ask for repairs. For example, if there is a concern that will affect securing home insurance. In this case, the seller does not have to do the repairs, though.
Please note, this date is very important! This is the time frame at the beginning of the contract where you can cancel the contract and receive your escrow deposit back. After this date has expired, you will not be able to cancel the contract and receive your deposit back (exceptions apply).
If for any reason, closing is canceled and the inspection(s) have been completed, the buyer will be responsible for the costs.
Financing
There are four important deadlines we must meet for the financial contingency in the purchase agreement. Other steps and requirements may be requested by the lender that are not listed below. It is important that you complete and deliver required documents and information to the lender in a prompt fashion to ensure no delay in the loan approval process. (If Applicable)
Loan application
To officially begin the loan process on a property, you must complete loan application documents. If you have not been pre-approved, this must be completed within the time period noted on the contract.
Appraisal
Your lender will order an appraisal of the property that is to be purchased. The property must appraise for the purchase price. If the property does not appraise for the purchase price or higher, the lender will not give a loan. There are a few options if this occurs.: One, the seller will reduce the purchase price to the appraised value. Two, the buyer pays the difference. Three, the buyer and seller agree to split the difference. Four, the buyer has the choice to cancel the contract based on loan denial and receives the escrow deposit back (exceptions can apply).
Please note, generally the buyer pays the lender up front for the appraisal fee. If, for any reason, closing is canceled and the appraisal has been completed, the buyer will be responsible for the cost. In some cases, the lender will consider refunding the appraisal fee, but not always. If this situation occurs, please contact your lender for more information.
Loan approval
This is the lender’s commitment to provide your mortgage. You must receive this loan approval, from the lender, within the time period noted on the contract. You must deliver the loan approval to the seller within the time period.
HOA/COA documents
If you are purchasing a property with a HOA/COA, you will be provided association documents by the seller. Once the required steps are completed by the seller/association, the association will issue a Resale Disclosure Package outlining the HOA’s or COA’s financials, bylaws, rules/regulations, etc. The estoppel letter is a legal document provided by the seller’s HOA/COA outlining the current owner’s financial standing, past due balances, current fees due and lists all future special assessments due. Each letter has a “good through” date. This is a 3-day time frame towards the middle of the contract where you can cancel the contract and receive your escrow deposit back. After this date has expired, you will not be able to cancel the contract and receive your deposit back (exceptions apply). Remember that you will have a 3 – day period to decide.
KEEP GOING, YOU’RE ALMOST THERE!
Homeowners/Hazard Insurance
Homeowners hazard insurance must be set up prior to closing, as required by your lender (optional, if cash purchase). This coverage is designed to protect your investment and give you peace of mind. For condos, many times this policy is included in your maintenance fees, but an interior/content insurance policy is recommended. If the home is in a flood zone, an elevation certificate will be ordered with the home survey and the certificate must be provided to your insurance company in order to complete a quote for flood insurance.
If you are interested, please let your agent know, and we will have Justin McFarland reach out! Here is his contact info:
Prosper Insurance – Justin McFarland
Email: jmcfarland@prosper.insurance
Phone: 757-664-9123
Home Warranty
Different (but just as important) as home insurance, we recommend protecting your home by buying a home warranty. Especially in your first year, you are dating at home! You don’t know what can come up, or what problems may arise. By getting a home warranty, it can protect your larger appliances, major systems, and all the little things in between.
We recommend using CINCH, because of their client care, and wide range of plans they provide. Also, by using CINCH Home Services, you get a direct line to one of their representatives, so you never have to worry about communication when something goes wrong. Please let your agent know you are interested, and we will have Patricia Edwards reach out!
Cinch Home Warranty – Patricia Edwards
Email: pedwards@cinchhs.com
Phone: 757-472-5602
Title Insurance
A title is the foundation of real estate ownership and refers to your legal right to own, use, control, possess or dispose of the home. Title insurance helps protect you or your lender from prior rights or claims that other parties may have to the property, as well as from any outstanding debts of previous property owners. Before issuing a title insurance policy, a title agent will check for any defects in your title. Title insurance is based upon a public records search, which is evaluated to determine the state of the title at the time of your purchase. In the event that someone challenges your title, the title insurance underwriter (not the title agent or agency) will defend your title and pay all related costs and loss in property value that might ensue, up to the limit of your policy.
Survey/Elevation Certificate
Your lender will require a survey before closing. If the home is in a flood zone, an elevation certificate will be required/ordered with the home survey. The survey/elevation certificate fee is included in your closing statement and paid at closing, in most cases. If, for any reason, closing is canceled and the survey/elevation certificate has been completed, the buyer will be responsible for the costs. (For single family property, if applicable)
Utilities
Arrange for home utilities connections to start the day of closing or possession, so you can enjoy a smooth transition into your new home. Utilities may include electric, gas, water, phone, television, internet and trash/recycling collection.
Closing Disclosure
Prior to closing, you will receive the Closing Disclosure (HUD/CD) to review. This document verifies all your closing costs, fees and down payments. It will include the final amount to be paid at closing. This is the document that may be required to deliver to the water company to transfer services. Please note, if you are getting a loan, there is a rule called ILA-RESPA Integrated Disclosure (TRID). This rule requires you receive the CD 3 days (Not including Sundays and holidays) prior to closing day. If you do not receive and sign the CD from your lender in this timeframe, closing MUST be extended. For more information on TRID, please contact your lender.
Final Walk-Through
A day or two prior to closing (in some cases on the day of closing), we will perform a final walk through of your soon-to-be new home. We do this to make sure everything is in the condition you expect. We will schedule the walk-through with you or, if you are not going to be present for closing, you may appoint a friend or a family member to complete the walk-through. A reminder to please bring your administrative fee check of $495 with you to the walkthrough. Your agent will also remind you as the day gets closer!
Closing Funds
You will need to bring funds to closing in the form of a wire. You will do this prior to closing by going to your bank where the funds for closing are being held. Don’t forget to give your bank the title company’s wiring instructions and amount to wire. The bank will wire the funds to the closing title company’s escrow account. Please call the title company before, to confirm the account number. Please note, in a sale with proceeds (generally for a Seller, only), the title company will wire proceeds to the Seller’s account after closing is final.
Closing Day
We will review the closing date, time and location with you in advance. All parties whose names are on the contract must be present, unless prior arrangements are made with the title company. Please be sure to plan ahead of time to be available the day of closing. YOU MADE IT!