The March to “Closing”
Many people think finding the right home is the most challenging. The highest risk of problems is in the time period you make an offer to the closing. Everyone involved has a role to play and responsibility to fulfill. My job is to orchestrate and insure all is in tune with each other and on time. Anything can hiccup along the way so checking the progress on a daily basis is crucial especially the closer we get to the day of closing. Staying on top of things means you’ll know immediately if there’s a problem that must be dealt with. Here’s a bit of information that focuses on a few common problems that home buyers must deal with before they close on a house.
Most of your home buying challenges and stress’s are behind you now and you’re on your way to closing… better known as a day of celebration. The real estate industry also calls it settlement: the event that transfers ownership of the property to you. This is where the realtor, the lender and the closing agent (can be broker, lawyer or closing specialist) will help guide you to the final steps of your new home.
10 things NOT to do
1. Don’t Make a Major Purchase
If you are depending on a mortgage to purchase your property and to move in, don’t make any major purchases until after the closing on the home (fight the urge to start to decorate before you move in.. and definitely no new cars to put in your new driveway).
An increase in your debt to income ratio reduces the amount of monthly income available for your mortgage payment. Even the smallest purchase could cause a change in your ratio and approval status.
Even using cash for the purchase could also create a problem, since banks consider cash reserves when approving your mortgage. If you must make a major purchase before closing, talk to your loan officer before you do it.
2. Changing Jobs
Job history is as important to lenders as your credit. In fact they not only like to see a consistent job history, they are required to check. You may here the acronym VOE prior to closing. That is when the underwriter of the loan call to Verify your employment by speaking with you employer/supervisor within 48 hours of your closing. They aren’t usually as nervous if you change jobs within the same field, but it’s better to stay put, if possible until the keys to the house are in your hand.
3. Emotions, don’t’ let them Take Over
Be realistic. No home is perfect, especially older homes. If the seller refuses to do a small repair, don’t let it kill the deal on a home you truly love. Realize it’s not unusual for new owners to take care of some repairs themselves. Keep a cool head during the entire home buying process, especially during and after an inspection.
On the other hand, don’t fall so much in love with the house that you’ll buy it no matter what needs to be done–unless you’re absolutely sure you can handle it emotionally and financially. Decide what type of repairs you can realistically tackle, and then stick with the decision.
5. Utilities & Address Change
Many times we get so caught up in getting to the closing we arrive at our new home only to find no lights, no water etc… Call the utility companies (see community information for local contact number and web sites) as soon as you have a contract. Find out how many days lead time they need to switch the service, and then get back with them when you have a firm closing date. As well, make sure you get an address change kit from the Post office.
Don’t forget to discontinue services at your previous home.
6. Home & Hazard Insurance
Insurance is a must when purchasing with a mortgage. But it is also suggested even if purchasing with cash. Acquire home and hazard insurance as early as possible. There are many insurance agencies available to you. I have listed a few on the “insurance” tab under community information, new to the area. These are not referrals just suggestions to get you started if you do not already have some one you are working with presently. Note though not all insurance companies are writing policies freely in Florida at this point so please inquire early. And get bids. You would be surprised how they can vary by thousands of dollars for the same coverage. Also, if you are purchasing during hurricane season make sure you get a binder quickly for you do not want to be caught during a hurricane watch when new insurance coverage is not available. Lenders will ask to see an insurance binder showing you have coverage at the closing.
In some locations, additional types of insurance coverage might be necessary. Talk to your lender about insurance requirements well before the closing date.
7. The Seller
While it’s great to be friendly, too many long discussions with the sellers could disrupt the negotiation process as well as cloud your judgment.
Remember, this is their home . A casual statement about “ripping up that ugly carpet” might be enough to keep the seller from negotiating with you about repairs or other issues that crop up.
8. The Appraisal
The lender is responsible for ordering the appraisal. It gets assigned to an appraisal company at random and follows all of the Fannie Mae rules and guidelines in processing it. If it comes in low, don’t panic. There are lots of things you (and your agent) can do to correct the problem.
9. Lender Requirements
If nothing else, you must be efficient in responding to lenders reques. Know what is expected of you and take care of it. If you have ANY questions along the way, please ask. Your closing depends on you providing accurate information on a timely baiss. Waiting doculd jeopardize your opportunity to close and the monies you have spent to date could be lost and or forfeited. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That’s something you must handle yourself..
10. Don’t Go It Alone
As your agent, it’s my duty to track many of the day to day details that involve the lender, the seller, or the seller’s agent.