Before you can close on a new home, you have to do a lot of things. Some of it is up to you, and some of it is up to other people. But don't think it will happen overnight or without any problems. There are too many things to think about. And a lot of money is at stake, but not all of it is yours. So, the smartest thing to do is to make sure everything is taken care of on your end. Dot every I and cross every "t" that you can from your side. And be very careful about who you do business with. From the start, choose only the most experienced, successful professionals and companies you can find. They have what it takes to make the long and difficult process a lot easier to deal with. For example, if you can, it's a good idea to go with a Texas-based lender because Texas has some different real estate laws than other states. A lender from out of state might make some wrong assumptions, which could slow down the process.
Most people who want to buy a home take big steps when they pre-qualify for a home loan and sign a contract. But that's just the first step on the way to owning a home. And sometimes the rest of the trip can make or break a deal. During this time, the lender is trying to finish the financial package, the title company is doing the necessary research, surveys and appraisals are set in motion, and the homebuyer orders home inspections and gets homeowners insurance. If anything goes wrong at any of these steps, the deal could be delayed or even fall apart.
As a homebuyer, you need to know that pre-qualifying for a mortgage loan and actually getting one are two very different things. You also need to know that the difference between the two can definitely change the closing date. For a homebuyer to get pre-qualified, he or she must meet with the lender and have all the necessary information (Social Security number, income, etc. at hand). Then, after looking at your credit score, income, and job, the mortgage lender writes up a document that says how much of a loan you might be able to get based on this preliminary information. Remember that this is not a final answer or a mortgage loan approval. It's just the lender's "educated guess," so don't start counting your chickens just yet. In fact, many lenders today tell homebuyers to skip pre-qualification and go straight to qualification before they start looking at homes or, in many cases, even before the contract is signed.
That's because the real process of qualifying is much, much longer and more in-depth. Most of the time, it means giving the lender accurate information, W2 forms, bank statements, tax returns, and proof of income. All of this needs to be approved by the lender, which can take some time. That's because the information you gave them is being checked and double-checked right now to make sure it's correct and up-to-date. So be sure of your numbers and facts, because any mistakes, inconsistencies, credit problems, or wrong information could really slow things down at this point.
What a buyer of a home should know. Or expect. Or do.
- The lender must also give you a truth-in-lending statement that tells you everything you need to know about how much the loan will cost.
- It is the job of the title company to look into public records and make sure that neither the buyer nor the seller have any lawsuits, liens, or judgments against them or the property.
- Lenders should give buyers a good-faith estimate of how much money they should bring to the closing in the form of a certified check. Most of the time, closing costs are between 3 and 6% of the loan amount.
- You have the right to look at the Uniform Settlement Statement one business day before the closing. This list shows how much you have to pay for each service at closing.
During the research phase, one of the real estate agent's jobs is to stay in touch with the title company. This is to make sure that any problems are taken care of quickly. It's important to avoid surprises at the last minute, which could slow down the closing process.
Before closing, a smart homebuyer will have the house and property inspected to make sure everything is in good shape and no major repairs are needed. The price in the contract could change if repairs were needed. When it's done, the buyer should be there with the inspector. Why? Because an inspector's report can be 10–12 pages long and full of technical jargon, being there to ask questions and get answers on the spot can really help you get a handle on the situation. The price of a home inspection depends on where the house is, how big it is, and what kind of foundation it has. Also, before the closing, the homebuyer needs to order a termite inspection. If an inspector isn't qualified in this area, they will have to be replaced with someone who is.
It is the buyer's responsibility to get homeowners insurance and bring proof of it to the closing. The Texas Department of Insurance says that buyers should expect to pay between $400 and $1,000 a year for insurance. If the home is in a flood zone, the cost could be even higher. Most lenders will suggest that you set up an escrow account where money is set aside each month for insurance and property taxes.
The lender will want liability and hazard insurance that covers at least the amount of the loan. At the closing, you'll have to pay the premium for this insurance for the first year.
The buyer should walk through the house one last time right before the closing. The walk-through should be done with your real estate agent. You want to make sure the house is in the condition you agreed to in the contract. Don't forget that once the closing is over, you own the house as is. You can no longer use the law to force the seller to fix anything, and the seller can no longer be forced to fix anything.
The time and place of closing are usually set by the settlement agent, which is usually the title insurance company.