Buying your first house can be a very exciting time, but a stressful one as well. Even if you think you covered every detail, there might be some that slipped by that could either end up delaying the transaction or scrapping it completely.
This is why you need to do your homework about the process before you finalize any transaction to avoid errors that could end up costing you dearly in the end. Here is a complete pre-close checklist for first-time homebuyers.
Take Care of Contingencies
Most purchase agreements will have contingencies in them. These are things buyers could be obligated or have a right to do before finalizing the transaction. It could be conducting a pre-sale inspection or an appraisal, among other things
It’s always advised that you opt for a pre-sale inspection, and most will out of common sense. With an appraisal contingency, you can have a qualified third party come and appraise the home.
You could get a chance to back out of the deal if there’s too much of a discrepancy between the house’s real value and asking price. There are also cases when the sale will be dependent on whether the mortgage lender accepts the mortgage application or not.
Make Sure the Title is Clean
Whenever someone buys a house, they claim “title” to it, which is an officialized process that legitimizes the transfer of property which will then be confirmed by public land records.
Your mortgage company will likely require that you perform a title search on the property along with getting insurance to protect you in case somebody else tries to claim title.
If you want to avoid problems, there are organizations like the Bay Title Company that will conduct the search for you and make sure everything is OK. They will be able to see if there are any liens on the title or possible foul play.
In some cases, for instance, distant relatives may stake claim to the house and you could find out that the seller didn’t have the right to sell it in the first place. Clearing the title could save you from headaches and lengthy legal procedures.
Get Mortgage Approval
You may have put your first down payment on the mortgage, but that doesn’t mean you’re in the clear yet. Your loan application still has to go through the underwriting process.
This is where underwriters will check the state of your finances to see if you represented them properly. They will check at things like income and credit score as well as the house’s appraisal among other things.
You will also want to check your closing disclosure which is a document outlining all of your mortgage loan’s costs and terms. There could be some discrepancies between what you will actually pay vs what was originally estimated. If there is a significant one, make sure that these are clarified with your lender first.
Final Walk-Through and Closing
You will usually be allowed to have a final walk-through up to 24 hours before closing. This is where you check if the previous owner has completely left the premises and if repairs that were agreed upon were conducted.
When officially closing, you have to make sure that you have all the required documents with you. These include proof of home insurance, home inspection reports, government IDs with photos, a copy of the sales contract, and any additional paperwork required for the loan to be approved.
The above is the whole closing process in a nutshell. Make sure that you review every step in detail, and don’t hesitate to ask for professional help when needed.