Getting From Contract To Closing

Once your contract is accepted, here’s what needs to happen

There are a number of things buyers will need to take care of in the weeks between a signed contract and the closing date. In addition to preparing for the move, contractual obligations must be fulfilled and contingencies taken care of. These are the most common items to be dealt with; your agent may have additional items depending on your situation, and should guide you through this stage of the transaction as much as he did during the home search phase…

Mortgage Contingencies

To comply with your contract, you’ll usually need to make a formal written application to a lender or through a mortgage broker. The mortgage company may ask for additional information, necessary to process your loan and evaluate your credit, ability to repay the loan, and the collateral (your new home) backing the loan.

Part of the loan process will usually involve having the property appraised. The licensed appraiser will typically inspect the property, and make a report to your lender. You may not receive a copy of the report until at or after closing.

Your lender should issue a loan commitment letter once you’re approved for the financing you requested. That will demonstrate to the seller that you have financing lined up. A typical commitment will list contingencies to be cleared; if you need to provide additional documentation, do it as quickly as possible, but normally the only remaining contingencies will be evidence of title insurance, property insurance, and similar items that are related to the property and not to your credit file. Provide the commitment letter to your agent so that the financing contingency in your purchase contract can be cleared.

Inspections

Your contract and addenda will define the time frame allowed for inspections, and what the seller’s obligations are. Should you choose to have professional inspections done, hire an experienced and independent inspector. He should explain any limitations in the inspection, and advise you of additional inspection options such as mold, lead paint, termite, pool, dock/seawall, septic, and well, if they apply to your situation. Typically the inspections are your cost, as well as any expenses to repair items damaged during the inspection.

The inspector should provide you with a detailed inspection report, listing areas of concern and items that should be addressed. However, the language in the contract should be used in determining what repairs are necessary, and your agent should assist you in communicating with the seller’s agent the items you feel should be taken care of. In the case of an “AS-IS” sale, you will typically only have the option to cancel the contract if not satisfied, and this option should be exercised in writing prior to the date specified in the contract.

Arranging The Move

Typically during the process you will also:

  • Contact utilities (phone, gas, water, electric) to arrange to start service on your closing date.
  • Arrange for hazard and windstorm insurance, and any additional coverage, through a licensed insurance agent. (Provide proof of coverage to your lender, and note that you can and should arrange your policy well ahead of time especially during the hurricane season to avoid closing delays)
  • Arrange change of address for your subscriptions, credit card and bank accounts, and friends and relatives. (Many agents will, if asked, provide postcards and address labels. I provide both of these to my customers on request.)
  • Arrange school registrations if you have school age children. Contact the local school board.
  • Open new bank and broker accounts and transfer funds, if necessary.
  • Plan in advance for closing day - arrange to have a cashier’s check, bank draft, or wire transfer. Funds will need to be available in the account.