8 Steps for Loan Closing: The Normal Timeline and Escrow Periods MMM E8

    8 Steps for Loan Closing: The Normal Timeline and Escrow Periods MMM E8

    Home Buying

    January 8 2019

    Sometimes we may feel like it will never ends the process of buying a new home, till all of a sudden it’s all over and you become a homeowner.

    Today we are going to go over the different stages that you’ll likely have to go through before you can finally say that you have a new home.

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    STEP 1: Pre-Approval—1 Week

    Getting pre-approved can be a key step in order to make this long process seem much shorter and be ahead of your competitors that are not pre-approved in the market. Less than 10 percent of homebuyers get a pre-approval letter before they start looking to buy properties, which doesn’t make much sense as it’s usually a requirement to make offer on any property. Your offer won’t be taken nearly as serious by the sellers as if you were pre-approved. You’ll also see that many realtors will stick to show houses to only those who have been pre-approved in the first place. The pre-approval letter will make it a lot easier to get that house of your dreams that you really don’t want to lose. And the best part is that it takes about 15 minutes to fill out a mortgage application. Make sure you have the following information:

    • Employment and address information for the past two years
    • Current employer and landlord contact info
    • Bank, retirement and investment account statements
    • Proof of income (such as pay stubs or tax returns)

    Once you’ve filled it out, it should take just about one to two days to get a pre-approval, and around a week to get pre-approved.

    STEP 2: Finding a Home—No Timeline

    Now that you have your pre-approval letter, you can start shopping. Now the clock stops and you’re not in a rush for making a decision, so take your time to look at what the market has until you find what suits best your needs. Buying a house is never a decision that should be taken lightly.

    When you’ve found the house that you were looking for, you’ll be ahead of competition and things will go quicker. However, the negotiations that will be involved can certainly be overwhelming at times till both parties agree on a price for the property.

    Here are some tips: Be realistic with the amount of money you can invest in a house, but also don’t go too low with your offer as that can end negotiations, especially if there are others interested in purchasing that property too. A good way to estimate the home’s value would be to compare it to other similar properties that have been sold in the area, and then see if the list-price is fair.

    If you manage to end the negotiations on a good place and get your offer accepted, then you proceed to go into escrow and now what’ll matter is to go fast and make the right moves to try to get lower interest rate.

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    STEP 3: Home Inspection—1 Week

    Now what we’d recommend you to do is to make an inspection of the home that you are aiming to buy, to evaluate any defects in the property that may affect its safety,liability, future market price…

    Make sure an inspector comes to take a look at the place before you make a final offer on the place, the faster you can the inspection done the better as there are deadlines always for inspections to be done!

    STEP 4: Appraisal and Title Search—1 Month

    You’ve looked through the inspection report and decided to move forward. As soon as you give your go-ahead on the property, your lender will schedule an appraisal to make sure the sale price is aligned with the values of similar homes. An independent, licensed appraiser will estimate the home’s value based on comparable properties.

    It can take up to a week to get an appraiser to look at the property, maybe more if the market is hot where homes are selling quickly, and another week to finish the process. Next, a title company will research the home’s legal history to make sure there are no claims, liens, pending legal actions or other encumbrances on the property. Altogether, it takes about a month for your lender to make sure these important bases are covered.

    STEP 5: Scheduling Closing Day—1 Week

    Once the appraisal and title search are done, you’re on the last part of the process to get your home. Your closing date will be scheduled for the following week.

    STEP 6: Closing Disclosure Review—3 Days

    Before you sign on your new home, you’ll have a final chance to review the terms of your mortgage and an itemized list of your closing costs. Your closing disclosures will arrive three days before closing.

    Take time to look the closing disclosures over carefully. This document determines who is responsible for which costs, so you’ll want to ensure each item on the list has been assigned to the correct party.

    A Closing Disclosure usually contains:

    • Your basic mortgage information
    • Transaction summary for the sale
    • Settlement charges, including total fees paid to the real estate broker, mortgage lender and escrow reserves
    • Final loan terms, including your initial interest rate and monthly payment

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    STEP 7: Closing—1 Day

    It’s finally time to sign all that paperwork and take possession of your new home. The process can take a while, so it’s not something you want to try and squeeze into your lunch break. Better plan on taking the day, or a half-day, off.  Be sure to bring a valid ID.

    This is also when you’ll need to pay your closing costs, so come prepared with any required payments in hand. In order to process payments quickly and get you into your home, payments should be certified funds, such as a cashier’s check or wiring the funds directly to escrow a few days prior to closing.  Personal checks are generally not allowed.

    You’re almost there!

    STEP 8: Getting Your Keys—2 Days

    The papers are signed and you have everything ready to move in. You should receive your keys within a few business days. If in doubt, ask your Realtor as it is in your original contract. Now that you’ve made it through the mortgage process, you can relax and enjoy your new home!

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