- BUYING RESOURCES -
Your offer was accepted! Now the work really starts.
"Pre-closing" may also be referred to as:
- Due diligence period
- Inspection period
It could take several weeks before actually closing, depending on your source of funding. The average closing date is about 45 days after the offer is accepted.
During this time you’ll be working with the mortgage and title companies and you’ll hear from them often. Respond to their requests as quickly as possible to make your closing smoother and faster!
HOW TO CLOSE FASTER
The biggest determinant in how quickly your loan closes is YOU. You can speed up the process by quickly responding to calls or email requests from the mortgage company. You’ll hear from them often, so be sure to stay on the ball. The longer you take, the longer it will take to close on your loan and home.
Title company Florida Title & Guarantee Agency has a decent summary of what you'll see from the title company during the closing period. A pdf they created is linked below.
- THE PRE-CLOSING PERIOD -
Below is what you're likely to see during the pre-closing period.
You will officially apply for the mortgage once the offer on the home is accepted. You already have a mortgage preapproval from one lender, but now you can shop around for better mortgage terms.
The application for the mortgage will be much more intensive than the pre-approval. The mortgage underwriter will request and review more financial documents and verify that the property meets certain requirements.
FINANCIAL DOCUMENTS FOR MORTGAGE APPLICATION
MORTGAGE DOCUMENT CHECKLIST
The lender has to check your credit and you will pay for this out of pocket.
Lenders will require you to have an appraisal completed on the home. They want to make sure the money they are lending isn't more than what the home is worth.
An appraisal is a far more detailed price analysis than the estimate YELLOW has completed.
The appraiser will produce a report that shows the fair market value of the home by comparing it to recently sold homes in the neighborhood. Also, the report will list detailed information about the property and the neighborhood. You will pay for this out of pocket.
Here's an actual appraisal as an example:
YELLOW provides an inspection report for every home listed with us, but some buyers may choose to do an additional inspection.
All inspections on YELLOW are completed by independent inspectors to prevent any conflicts of interest.
The inspection uncovers any potential issues with the home - structural, plumbing, electrical, etc. - that may not be visible when you visited the property.
Nearly every home inspection - even those on new homes - will turn up some issues. Some are minor and can either be ignored or resolved through negotiations. However, some cannot be ignored.
You can make a list of issues you’d like addressed by the seller and the seller can negotiate what they’re willing to (and not willing to) fix. If an agreement cannot be reached you can walk away from the property without penalty.
NOTE: If the home is vacant, you’ll need to contact the utility companies (power and water) to get services turned on if you’d like to do an inspection. This is not an uncommon request and the utility companies can assist you with this process.
A WDO (wood destroying organism) inspection report is separate from the home inspection discussed above. It is done by a pest company where they inspect the home for evidence of an infestation or damage caused by wood destroying organisms. This report is often referred to as a termite inspection.
The WDO is typically requested by the mortgage company when you're applying for the mortgage and with FHA loans. Buyers will have to pay for this out of pocket.
Septic systems are located underground and it is impossible to tell their condition without an inspection. The mortgage company usually requires this inspection if the home has a septic system.
These inspections can be more expensive since the inspector must locate the system and dig to see it. Buyers will have to pay for this out of pocket.
This inspection is optional.
With this inspection, an inspector typically uses a video camera to crawl through your pipes to make sure they are in good condition.
Here's who we suggest these inspections for:
The title company will likely do a property survey to ensure the piece of land you're buying is the accurate dimensions and acreage, and that none of your neighbors have encroached upon your property lines.
Buyers have 5 days after receiving the survey to review it and notify the seller if issues are found. Sellers then receive 30 days to resolve the issue. If the issue is not fixed in the set amount of time, the time can be extended or the buyer can cancel the contract and have their deposit returned.
"Title" refers to someone’s legal ownership of the property.
Buyers taking out a mortgage will be required by the lender to purchase lender’s title insurance. This covers the lender up to the amount of the loan if any problems arise with the home’s title after financing.
The seller will pay for a title search to ensure there are no issues with the title. They will also pay for a separate owner’s title insurance policy as protection for the homebuyer in case a title problem arises in the future. It is issued for the amount you paid for the home.
Buyers have 5 days after receiving the title information to review it and notify the seller if issues are found. Sellers then receive 30 days to resolve the issue. If the issue is not fixed in the set amount of time, the time can be extended or the buyer can cancel the contract and have their deposit returned.
The title company typically handles these issues and will work with the buyer and seller to remedy any issues within the terms of the contract.
COST: Varies depending on the home price and mortgage amount. The cost is regulated by the State of Florida and is as follows:
Title issues do occur. Here's why you need it insured:
Every lender requires you to have homeowners insurance.
If you already own a home, you can call your insurance agency and let them know you’re buying a new home. They will write a new policy.
If you don’t have an insurance agent, you have a couple options.
BUY INSURANCE DIRECTLY
If you know exactly what coverage you need, buyers can contact insurance companies directly to buy a policy.
USE A BROKER
Many buyers, especially new buyers, use an insurance broker. The broker can shop around and find a policy that fits your needs.
USE AN INSURANCE BROKER
We suggest buyers use an insurance broker. It makes the process much easier.
To find an insurance broker, we recommend a basic internet search in the location of your new home (i.e. Homeowner insurance brokers in Ashburn). A local agency will have more knowledge of the coverage requirements and will help find what's right for you.
The insurance payment is usually rolled into your monthly mortgage payment. Your lender will open an escrow account and handle the payments to the insurance company. Be aware that you’ll probably make an initial payment for insurance at closing as part of your closing costs.
THE BIGGEST HOME INSURERS
There are some online upstarts that are making headway:
It’s possible you found a great home, but it’s located in a flood zone. You’ll have to get insurance for that, too.
Insurance to cover this risk is usually not provided in a homeowners policy so it must be purchased separately. The average cost of flood insurance in Florida's largest cities ranges from $350 to $950 per year.
FIND YOUR FLOOD ZONE STATUS
Flood Map Legend
To buy flood insurance, you must go through one of the federally regulated companies. According to FEMA, if your insurance agent does not sell flood insurance, you can contact the NFIP Referral Call Center at 1-800-427-4661 to request an agent referral.
Florida program info:
Before closing, you will need to set up the utility services at your new home. This includes both power and water at a minimum, but you may also need other services like gas or propane. Services like phone, internet, cable, and security can be scheduled now, but are not needed before closing.
To establish your utilities, it is usually easiest to call the utility company. That way you can find out what they will need from you to turn on their services. Sometimes this can be done over the phone or internet (especially if you are already a customer), but often it requires visiting the utility company – especially for power.
Though you may not yet know the exact date you will be moving, you need to do the best you can to prepare.
Experts recommend planning for a move 6-8 weeks before actually moving. That means you should be looking into moving or truck rental companies not long after your offer was accepted.
AVERAGE LOCAL MOVING COSTSThe average moving price for local moves is $25 per hour per mover. However, that price can be higher depending on your location within the country and time of the year (for example, summer, Friday's, and the end of the month tend to cost more).
NEARING THE CLOSE
At least three business days before closing, your lender must send you a Closing Disclosure. This form lists all final terms of your loan such as closing costs and the details of who pays and receives money at closing.
Also, a day or two before closing you will want to complete a final walkthrough. Here you will verify that the house has not been damaged and any items you wanted to address were completed. If everything looks fine, it’s time for closing.
The closing period