Contract to Closing-Important Timelines in Buying a Home
1. LOAN: No later than the start of looking at home, Buyer should contact their lender for pre-approval. As soon as the contract is agreed upon, buyer will make a formal application for a loan. Real Estate agents can give you the names of reputable lenders. However, the buyer will have to provide numerous documents and information about assets, income, and debts. Once completed the lender will pull a detailed credit report.
2.HOME INSPECTION AND REPAIR NEGOTIATION: This involves a through inspection of the property, performed by various inspectors chosen by the buyers. In NC, all inspections are Buyer expenses unless negotiated differently in the contract. The Buyer has the right to ask that some or all of the defects be repaired. The Seller is not obligated to make repairs and the Buyer has the right to redraw from the contract if no agreement can be made.
Repair negotiations can be more emotional and difficult than the original contract negotiations. Since inspections have their own set of required reports, they can become lengthly and frightening to the Buyer.
3. APPRAISAL: If a loan is to be obtained, the property will be appraised to make sure it is adequate collateral for the loan amount. If the property does not appraise, the contract must be renegotiated, or the Buyer will have to make a larger down payment. If not, the contract will fail.
4. LOAN COMMITTMENT: After all documents have been submitted and analysis performed, the loan will be sent to the underwriter. Typically, the underwriting will produce conditions that will have to be satisfied. This process is normally not completed until the day or so of the settlement date. This is a nervous period for the Buyer and Seller. The result is a committment letter from the lender that the loan is approved and the property will be closed.
5. CLOSING OR ESCROW: Typically an attorney specializing in real estate is selected to conduct the closing. The Attorney or Escrow Agent is normally the choice of the Buyer. Among other items, the attorney will check the title order survey, prepare the necessary paperwork, handle the receipt, and disbursement of all funds. The attorney will represent the lender and to some extent the buyer. Even if the Attorney may prepare closing documents for the seller, the seller is not represented except by the Listing Agent if there is one. The selected attorney will have to be approved by the lender.
6. WOOD DESTROYING INSECT INSPECTION: All Sellers and most Lenders require a licensed pest-control firm to confirm that the property has had no infestation by wood destroying organisms. If active infestation is found, the property must be treated to alleviate the problem.
7. HOME INSURANCE: The buyer must obtain a homeowner's policy covering the property. Some companies require a few days to write a binder, so the Buyer should arrange for coverage at least 10 days prior to settlement. In the initial stages of the inspections, the buyer should have a CLUE report pulled on the property to see if there have been prior insurance claims against the property that could increase the premium.
8. REPAIR RE-INSPECTION : Several days before settlement, any repairs agreed upon should be completed to industry standards and reinspected. Buyer should always have the property re-inspected to determine that all repairs have been satisfactorily completed.
9. UTILITIES CHANGE OVER: Buyer and Seller should arrange to have the utilities transferred to the Buyer, normally on the settlement date. Since the Buyer may have to make an in-personal application with one or more of the utilities, it is important that the cut off and start dates coincide to avoid a lapse in service. Allow 5 business days to get this accomplished.
10. CLOSING: The closing attorney will ensure that all documents are in place by settlement date. The Buyer and Seller normally will meet at the same time, but this is not required. In NC, possession and disbursement of funds do not take place until the new deed is recorded. Normally this occurs the next business day or in the afternoon of a morning settlement. Prior to or at this meeting all the paperwork will be reviewed and signed. Once monies are made payable to the closing attorney in certified funds. The attorney will prepare an account all of all funds for all parties.
Approximate Time Line
- Deposit earnest money check and make loan application
- Pay for the appraisal and credit report
- Schedule inspections
- Conduct property inspections
- Submit repair request
- Verify that lender have all needed information
- Schedule movers
- Re-inspect repairs
- Verify that the loan is in final stages of approval
- Obtain certified funds
- Arrange for the transfer of utilities
- Attend settlement or go by the attorney's office to sign papers
- Arrange for exchange of keys and personal items