Buyer Basics Contract to Closing
Congratulations! You just went under contract on your future new home. It’s an exciting time that can also be stressful due the many steps standing between you and the closing date. This is meant to be an outline of those steps, actions you should take, and important things to remember.
The time in between your offer being accepted until you move into your new home is best broken into two main sections: during due diligence and after due diligence. Due diligence is the time, usually 2-4 weeks, in which you gain access to your future home to assess and inspect. By the end of the due diligence period, you need to make the decision to move forward or not with the purchase. (There may be some additional contingencies that would still allow you to cancel the contract, such as a contingency for financing approval from a mortgage lender. Some states, such as North Carolina, do not have this contingency in the standard contract so the buyer must get financing approval before the end of due diligence!)
Below are the major steps with actions and things to remember listed.
During Due Diligence Steps
|Hire and schedule a certified home inspector who will provide a general home inspection. Consider hiring specialists if recommended by the general inspector.
|Do this immediately to catch potential issues and allow enough time for price negotiations.
|Mortgage lenders usually require the property’s value to be determined by a licensed appraiser. Work with your lender to schedule.
|If the appraisal is lower than the offer price, renegotiate or you will need to bring more money to closing.
|Another item usually required and scheduled by your mortgage lender.
|Appraisals and surveys may need to be scheduled through your real estate agent communicating with the seller’s agent or seller.
|Finalize your mortgage approval with your lender, if possible. This will likely require lots of nudging on your part to the lender.
|Ensure you have enough time set in due diligence to obtain approval, especially if you are in a state not using a mortgage contingency clause!
Weeks or months may pass between due diligence and the closing with attorneys. This is not the time to lose focus as there are additional tasks to monitor and new ones to schedule.
After Due Diligence Steps
|Mortgage companies require a home owner’s insurance policy which is usually paid on a monthly basis with your mortgage principal and property taxes.
|Contact your current insurance company and ask for a quote. There are online companies (like Policygenius) and local insurance brokers that can also shop around for the best quote. Check this post for information on where to find the best places for homeowner’s insurance.
|Before closing (at least 3 days) your lender will send a preliminary closing disclosure (CD) which lists all charges related to the purchase. Review it for accuracy.
|Review this carefully to make sure mistakes were not made.
|Attorneys are usually in a race to the finish to ready all of the closing paperwork and you will not likely see it before the day of closing, although you can request it. The attorney should be able to explain any of the contracts in plain English when you are at the “closing table”.
|Do not sign anything you do not understand! Get clarification from the closing attorney.
|Making some improvements to your new home that require professionals? You may need to hire a general contractor or hire multiple trades people on your own depending on the size of the renovation project.
|Be sure to schedule far in advance so you can get multiple quotes and confirm availability.
|So caught up in closing that you forget to schedule a moving company? Don’t let that be you. Moving companies can become fully booked in sprint and summer months, so get in front of this.
|Interstate moving requires extra scrutiny as many moving companies subcontract to national carriers. Moving companies also increase their rates during peak season. See this blog post on moving tips. You may also want to purchase moving insurance to cover any in-transit damage.