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You’ve come a long way toward owning a home. You’ve conquered the major home buying process steps: You worked on you credit, put together a down payment, got approved for an affordable mortgage and, even, saw your appraisal go through. Nothing left to do, but sit back relax and wait for move-in day to roll around, right? Not so fast. The home buying process is … well, a process. And it doesn’t end once the appraiser files their report. You’ve still got to review the results, select an escrow company, get home insurance and close. Plus, you’ll need to set yourself up for success once you do get the keys to your new house. Let’s break down the major post-appraisal steps of the home buying process — and address what you can do to avoid any problems during each one.
Review the results of the inspection (and possibly renegotiate based on those results). Inspections typically do not turn up major problems. Nevertheless, expensive repairs are sometimes needed. This is the reason you should always include an inspection contingency in your purchase offer. If the inspection turns up major problems, you have several options. Assuming you put the proper contingencies in place in your purchase offer, they are as follows:
Escrow is a method of giving and receiving items, such as money, property, titles, deeds, etc., using an independent third party. In a real estate transaction, you, as a buyer, do not want to give the seller money until he or she has given you the deed, and the seller does not want to give you the deed until he or she has received your money. So, how do transactions get done? An escrow account is opened, and the escrow company is given instructions agreed upon by all parties involved, for example, the seller does not receive X until the buyer has put Y into the escrow account… Once all of the requirements have been met, each party receives what was agreed that they would receive (the home, the money for the home, etc.).
Your lender will require that you have insurance. What you want, and need, is casualty insurance (known alternately as homeowners insurance or fire insurance). Such a policy is important to a lender because he or she is typically named as an additionally insured party and will appreciate having their lien paid in full if your home burns down. You will too. Something important things to note when it comes to insuring your new digs.
Once all terms have been met, your agent will instruct you on how to complete the closing. Depending on where you live, the closing is handled differently, but the general premise of the closing is the same. You and the seller sign a number of papers (either sitting around the same table, or at different times) required to close the deal. You will need to come prepared with checks. If a lawyer was involved, you should bring a check for his or her services. You’ll also need checks for down payment, closing costs, and the actual mortgage. Note that for the down payment, you can’t use personal checks. Check with your agent to find out how you should provide this payment, e.g., through bank check. The actual mortgage money, because it is typically such a large amount, is usually either wired to the title company, or brought, in check form, to the closing by the lender.
A note about utilities: When you move in, you’re going to want utilities like electricity, gas, and water to be fully functioning. Sellers typically tell utility providers the date they would like utilities discontinued under their name, and the more “thoughtful” among them will provide utility providers with your contact information.
Unfortunately, it’s equally likely that such a thing won’t even cross the seller’s mind. So, it better cross yours instead! If utility companies actually turn off service, you can bet it will be a few days until they can get them turned on again. Worse yet, there may be additional costs for that service. Make arrangements with the seller, however, and you’ll have no worries.
Remember, lenders may pull a final credit check before you close, so it’s important to refrain from doing anything that could affect your scores while you wait for the home buying process steps to be completed. You can keep an eye on your credit during this time frame (and beyond) by viewing your free credit report snapshot on Credit.com.
This story has been updated. It originally ran on April 8, 2013.
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