It’s finally time to make it all official and finalize the purchase of your new home! Here’s what that might look like.
Appraisal & Home Inspection
An appraisal and a home inspection are two crucial steps when buying a home that people often confuse – that’s why we’re going to clarify their purpose and importance. While an appraisal and a home inspection are similar, they actually serve different purposes.
An appraiser determines the home’s value, protecting both the lender and the buyer. They will check for major safety issues, and knowing the value can protect buyers from overpaying for a home. If the appraisal does come in low, however, you have the option to renegotiate, bring the difference, or walk away.
A home inspector goes beyond the appraisal and thoroughly examines all home systems, but specialized inspections can be requested for any concerns you may have. If issues are found, you can request repairs or walk away. While walking away is unfortunate, it’s better than taking on someone else’s expensive issues.
Appraisal safeguards value: inspection assesses condition. Both are crucial for making informed decisions.
Underwriting & Loan Approval
Have you ever wondered how lenders assess your loan application? Or what an underwriter’s actual job is? As a mortgage broker, my job is to guide people through the steps of buying a home. Most buyers get anxious about getting their final approval because they don’t know how that process works. Let’s talk it through:
Once your offer has been accepted, your mortgage loan is approved through a process called underwriting. During underwriting, the lender carefully reviews your application and verifies the information provided to confirm you meet their requirements. They evaluate factors such as credit history, debt-to-income ratio, and employment history. An underwriter also reviews the appraisal to confirm the value is sufficient and the home is in good condition.
After your application passes underwriting scrutiny, the lender will issue an official loan approval. This means you have met their criteria, and they are ready to fund your mortgage. It’s an exciting step because this means the home is almost yours!
Understanding the mortgage approval process empowers you as a borrower. Being well-prepared upfront with a strong preapproval and providing accurate information will help you get that dream home.
Closing & First Payment
At last – closing day is here! It’s time to get the keys to your new home. Most of the day involves signing paperwork, so here’s what’s involved to make it official:
Closing will likely occur at the title company or closing attorney’s office. Your realtor will be there too, as you sign all the documents that confirm your mortgage details and the transfer of ownership from the seller into your name.
This is also when any remaining money is due for your downpayment and closing costs. These will be given in the form of a cashier’s check, or you will be instructed to wire the funds to the title company before closing.
The amount due won’t be a surprise because you will have received a closing disclosure ahead of time that confirms the closing costs and what your mortgage payment will be.
Speaking of first payments – a buyer’s first mortgage payment is due one month after the closing date. For example, if the closing date is on September 15th, the first mortgage payment would be due on October 1st. You’ll get details on how to make your first payment at closing, and then again, a few weeks before the first payment is due.
Once everything is signed and filed with the county, the home is officially yours! Now, all that’s left is for the movers to do their thing or see if pizza and beer is enough to bribe your friends into helping!