The Homebuying Process: Step 4

The Inspection Objection is one of the big deadlines during the contract period.  Another item to examine is title insurance.  

Unlike other types of insurance, which offer protection against future events, title insurance protects you against events in the past.  The title company will do a title search to make sure that the current owners of the land actually have the right to transfer the property to you.  The title company will examine all of the past sales on that property and public records to see if anyone else could make a claim on the property.  For instance, if a contractor had done work on the home in the past but was not paid, he might put a lien on the property to try to collect when the property was next sold.  Or, if a previous owner was not of sound mind when signing closing documents, the heirs might claim that the property still belonged to the estate.  Should an unforeseen claim come up, the title company who insured the property would pay to rectify the situation so you would not lose your house.

Another hurdle to overcome is the appraisal.  If you are obtaining a mortgage loan to purchase the home, your lender will want to make sure that the property is worth what you have agreed to pay.  If the appraisal they order comes in lower than the purchase price, either the seller will have to come down in price, or the buyer will have to bring more cash to closing so that the lender isn't stuck with the difference.  This is also another point in the contract that allows the buyer to terminate the contract and regain the earnest money.

Be responsive to your lender to keep the process moving

One of the last items to settle is Loan Conditions.  This is the deadline by which the buyer has to decide if the terms of her mortgage loan is acceptable.  Keep in mind, this is not a deadline that the lender is beholden to.  Even though the lender is aware of this deadline and wants to give his client as much information as possible by then, there is still no absolute guarantee until final loan approval comes in and the clear to close is given by the underwriter.  Most times, though, the buyer is well aware of the terms they can qualify for much earlier in the process.

During this loan approval process, it's important to keep your finances and credit in order.  Your lender will pull your credit right before closing to make sure there haven't been any negative events that would affect your ability to make mortgage payments.  Avoid any large purchases - no furniture for the new place yet, no new credit lines, and for goodness sake, don't show up to closing in your brand new BMW!

Communication is the key to a smooth transaction.  The deadlines that the buyer and seller hold each other to are not technically deadlines for anyone else - not inspector, nor appraiser, nor lender.  It's a good idea to check in with these parties if at all possible while you are deciding on deadlines.  It's also important to work with an experienced Realtor who not only knows the ins and outs of the process, but also has good relationships with service providers who want to maintain the trust they've built.  The earlier snags can be discovered, the easier they are to fix.

image:  nikcname
 

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I would love to help you with your real estate journey. 

Please contact me at 303-917-7143 or robbin@stauferteam.com

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