Working towards the closing is the busiest phase for the buyers, their real estate agents, and the title company. It is the period between a contract and closing a sale and is usually between four to eight weeks. It starts when the contract is signed and the home of choice is officially under contract. On the other hand, the seller has relatively little to do with this phase.
- Title Company
The title company will be the one verify if the property has a clear title. They’ll investigate the property’s history of ownership to find out whether or not another party has any claim to the property, judgments, or liens. If they discover that the other party has a “cloud” on the deed, the title company will work on the deed to be cleared. However, the best and sole solution for a clear title is a title insurance which most of the lenders require when the buyer is borrowing money to finance the purchase.
The Title company will also conduct the closing. The buyer’s and seller’s real estate agents will be working with the Title agent plus the mortgage consultant. They’ll gather all the information they need to prepare the closing documents. This is the part when it may seem that no progress is happening because there will be lesser communication once the paperwork goes to the title company but rest assured that there is a lot of research and study happening.
Once the Title company has started your title search, your real estate agent will be providing most of the information to them. It will also come handy if you get to know your Escrow agent because they will be needing information from you from time to time. Some of the information they’ll need are payoff information if you have a mortgage, copy of documents of the purchases is deeded to a trust, LLC, or corporation, copy of documents if you are divorced or your spouses is deceased, and even if the deed is under one name, in Texas, both husband and wife needs to sign at closing. Also, confidential information such as social security numbers, mortgages, etc., is better provided to the Title company by the buyers for security reasons.
- Mortgage Applications
The buyer must apply for financing and be approved within the specified period of time in the sales contract if they choose to not pay in cash. It is always better to have the application submitted early because the lender may require additional documents in the underwriting process. This is to ensure that the buyer will have ample time to gather and submit those documents before closing. The timeframe for this process varies greatly depending on the lender so it is always advisable to get those needed documents as soon as possible. The application and letter of pre-qualification should be prepared and ready even before they start searching for the property to buy. Picking the right lender is as important as picking the right property to purchase, every single link in this chain of transaction needs to be well versed in their respective functions to ensure a smooth closing. Your real estate agent knows the best people to work with, consult them.
The inspection should be ordered shortly after the contract is signed to determine any existing or possible problems on the building structure, electrical, plumbing, heating/ cooling, etc are functioning properly. The inspectors will check fo any signs of poor drainage, check air and water quality and any signs of termites too. If the inspection report shows that repairs are needed, the agents of both parties will negotiate to come up with a solution. Possible options are: the buyer accepts the property “as is” or the seller may agree to work on some or all of the repairs. Occasionally, the sellers have been known to reduce the sales price so that the buyers can do the repairs after closing.
- Homeowner’s Insurance
Homeowner’s Insurance is commonly required if the buyer is financing the home purchase. This is to ensure that your investment is protected. It is practical to start searching for a policy early because a lot of sales contracts are contingent on the home being insurable. There are cases that the condition of the home is uninsurable and it is always best to know if sooner rather than later. In Texas, it is required by lenders that you provide flood, windstorm, and homeowner’s policies. These vary depending on the area and the title insurance of your choice.
There are certificates and addendums added if the buyer chooses to purchase a condo. It is advisable to work with a real estate agent who is expert in this area. A condo declaration should also be provided by the seller. This will inform the buyer about the rules and regulations for that particular building. The Resale Certificate for that Homeowner’s Association is another document to be provided because it contains the budget, insurance summary, disclosure of any pending assessments or lawsuits and the person to contact in that building for HOA information. It is recommended for the buyers to contact the President of the board or building manager to ask questions about the property. All of these documents are unique and further explanations may be required from your real estate agent.
Closing is the transfer of ownership from the seller to the buyer. It is scheduled when all of the terms of the agreement and all the conditions of the financing are fulfilled. In order for the buyer to take possession, the transaction should be funded. This means that the title company has paid the seller and recorded the deed. Occasionally, the lenders take an additional one to three days to fund the transaction so always check and not assume you can move on the same day.
These are the basic process from a signed contract until closing. Each year, more variables, emotions, personalities, legalities and new laws are being modified and added. Be sure to work only with a knowledgeable and credible realtor to work with especially if you are planning to purchase a condo. As always, we are here to help and hope you select one of our knowledgeable team to represent you in this important purchase.