Once your offer has been accepted and your contract is ratified, it seems like there are a million things left to do before settlement. Here are a few tips to help keep you organized and informed throughout the process.
When you first come under contract, these are the items that you’ll need to start working on right away.
EMD. Your earnest money deposit must be deposited right away. Be sure to coordinate with your agent on who will be holding it and how you’ll be getting it to them.
Home inspection. If your contract is subject to a home inspection, you’ll need to be sure it’s scheduled quickly. It will give you a much deeper look into the condition of the home and you’ll be able to see if there are repairs that need to be done, if you’ll need to negotiate any repairs or credits with the seller, or determine if you’re even still interested in buying the property.
Financing. Apply for your loan right away so that your lender can begin the loan process. Your lender will require quite a bit of documentation from you throughout the process, so it helps to stay organized and get them what they need quickly.
Contingencies. If you negotiated contingencies in your contract, each contingency will have its own deadline. Work closely with your agent to keep track of each date. Some typical contract contingencies are the home inspection contingency, appraisal contingency, and financing contingency, but there are many others that can be added, and some contracts don’t have contingencies at all.
The home inspection contingency deadline usually comes very quickly and in some cases may result in additional negotiations over repairs or credits. Your agent will help you navigate through this process.
Appraisal contingencies can sometimes trigger negotiations as well, if the appraised value is lower than your sales price. The appraisal report is critical to the financing process, and will be ordered by your lender.
Financing is a really big part of the home buying process and can be very time consuming. Try to be prompt and responsive to requests from your lender. The lender will often call on you to provide various documentation in order to get your loan approved. The financing contingency in a standard contract is not a hard deadline and will continue until it is formally removed by the lender providing a letter of commitment. However, you’ll want to do everything you can to get approved on time, as financing delays are a very common cause of postponed settlements. If you’re not ready to close by the settlement date that’s listed in the contract, it can cause tension between you and the seller, and can also potentially result in your being found in default of the contract.
Preparing for Settlement
Once your settlement draws nearer, there are several things you’ll need to do to prepare. Below is a sample list of some of those items.
1. Prepare any required funds for closing.
2. Initiate utilities and service accounts for your new home.
3. If you’re buying a condo or co-op, contact the property manager to coordinate your
move-in, if necessary.
4. Reserve street parking for your moving truck, if necessary.
5. Conduct a pre-settlement walkthrough inspection of the property.
6. Review your HUD-1 Settlement Statement, which details all costs associated with the purchase.
7. Bring your photo ID to settlement.
8. Have your check book with you at settlement, just in case there’s a difference between
your cashier’s check or wire and the total amount due from you.
Check your email! Almost everyone works through email these days, so when you have something as important as a home purchase going on in your life, be sure to check your email often. If you’re not great with keeping in touch via email, be sure to let everyone you’re working with know. Your agent, your lender, the title company, and all of the people on their respective teams will need to know how to reach you quickly.
Ask questions. As they say, it’s better to be safe than sorry. If you’re unsure of something, be sure to ask for help. Communication is key between all parties in a real estate transaction.
Stay organized. Some documentation will be requested of you, so you’ll need to make sure everything you need is accessible. Plus, with all of the deadlines, you’ll need to do your part in keeping it all on track.