Waiting for the closing…

Congratulations! You’ve successfully negotiated a Buy and Sell Contract, the inspections contingency has been removed and the buyer has agreed to purchase
your home. You’re ready to pack up and move. So, what happens next?

Now you wait!  It will take a few weeks for a number of people set the stage for the day you transfer title to the new homeowner.

·         Title Search:  The title must be researched to be certain that there is no debt, lien or other encumbrance preventing you from passing on a clear title to the property.

·         Appraisal: The mortgage lender will want to have the property appraised to be sure it is worth the
amount they are lending for it.

·         Contract Provisions: Your Realtor will be working with the Buyer's Realtor to make certain
that all terms and conditions of the purchase agreement are resolved prior to closing.

Processing the Buyer's Loan

When the buyer applied for his mortgage, he received a “conditional” pre-approval for the loan.  It’s now time to remove the “conditions” and get a “final” loan approval.

The lender will want to review various aspects of the Buyer's financial condition
and may ask him for additional documentation. They want to be sure nothing has changed since the Buyer applied for the loan.

During this same time period, the lender will contract with a licensed appraiser to evaluate your home to be certain that it is worth at least as much as they are lending.  If the Buyer is getting an FHA loan, the FHA appraiser will also look for safety problems and deterioration that may lead to costly repair in the near future.  He may require that specific repairs be completed before the loan can be granted.  Such repairs are the responsibility of the seller, unless otherwise negotiated in the contract. Recently, FHA has eased up on some of their requirements and are not as hard on the Seller as they've been in the past.

The processing of the loan should take about two weeks, but it could be delayed if third parties do not respond to the validation requests or appraisals are delayed.

Underwriting

Once all the information is collected, the processor packages the Buyer's data, the appraisal, and the title report and sends it to the lender’s underwriting department. The underwriter reviews the loan package to make sure it conforms to all the requirements of the specific loan. The underwriter has the ultimate power and decision authority over the approval of your loan.

It usually takes one to three days to have a loan approved by the underwriter. It may take longer during periods when there are a tremendous number of loans being processed.

"Clear to Close"

When the underwriter is satisfied with the review of the loan package, “final” loan approval will be granted and we will be notified of a “clear to close”.

A "closing" will be set on, or about, the closing date is specified in the terms of the Buy and Sell Contract and is coordinated so that all parties involved in the transaction can attend and so that the mortgage company will have time to deliver their documents to the title company.

HUD Form 1 or Settlement Statement

Once the lender has delivered the closing package to the title company, the  Settlement Statement referred to as HUD Form 1 is prepared. It contains all the actual settlement costs and specifies the amount you will reflect the amount you will receive for your home after paying off mortgages, liens, taxes, closing costs and broker fees.

The HUD Form can easily contain errors and needs to be looked over very carefully. Hopefully the HUD Form was provided for your review the day prior to closing.  If not you and your Realtor should go over it carefully at the closing to be certain there are no surprises.

The Closing

The “Closing” completes the home buying process. This is the day that you hand over the keys to the new owner and walk away with a check.
 

All parties will be present or represented at the closing for final review and signing of papers.  The closing agent will go through all the paperwork and explain everything to you. The closing process takes about one hour. During this time you will have an opportunity to talk with the Buyer about occupancy, transferring utilities, or any other matters associated with the property.