Disclosures

  • Dual Agency: Disclosed dual agency is a term indicating that the dual agency relationship in a real estate transaction has been fully disclosed to all parties in a real estate transaction. Dual agency refers to a single real estate agent representing both the homebuyer and home seller in a single transaction.
  • Exclusive Buyer Representation Agreement:: A buyer representation agreement is a contract between a real estate agent and the buyer to form an exclusive representation relationship
  • Buyer Representation Agreement:: a legal document that formalizes your working relationship with a particular buyer’s representative, detailing what services you are entitled to and what your buyer’s rep expects from you in return.
  • Non-Exclusive Buyer Agency Agreement: A non-exclusive agreement means the buyer can work with other agents
  • Agency disclosure: a written explanation, to be signed by a prospective buyer or seller of real estate, explaining to the client the role that the broker plays in the transaction.

Knowing Your Rights

  • ECOA: This law prohibits lenders from discrimination against any person because of race, color, religion, national origin, sex, marital status, age, or status with public assistance. 
  • RESPA: Is a federal law regulation a lender’s closing or settlement practices, requires that lenders make a disclosure and treat you fairly. They will give you a HUD booklet, good faith estimate of closing costs, itemizing all loan closing charges, restricting the amount of money a lender can ask you to put in escrow
  • Truth in Lending: Lenders are required to give you a truth in lending disclosure statement that ensures that you are informed of all the fees and costs of the loan. This is an estimate of the total financing charges you will pay over the life of the loan.
  • Fair Credit Report Act: This gives you the right to challenge the accuracy of any information in your credit report. National credit bureaus to use to check your credit… Equifax, TransUnion, Experian

Who attends the Closing

Sellers:

  • Seller’s Attorney (if they have one)
  • Seller’s Real Estate Representative
  • Seller’s Representative
  • Notary Public 

Buyers:

  • Buyer’s Attorney (if they have one)
  • Lender’s Representative
  • Buyer’s Real Estate Representative
  • Closing Agent (Usually title company representative)

What to expect

As required by law, your lender will send the Closing Disclosure at least 3 days before closing day. This document lays out, in detail, all of the important information of your loan. That includes: 

  • Loan term, loan amount and interest rate
  • Estimated amount of money you’ll pay on your loan each month
  • Closing Costs, which include loan origination, underwriting and government fees
  • Amount of money you’ll need to bring to closing also known as cash to close
  • Loan Disclosures

Closing Process

The mortgage closing process (also called the mortgage settlement) is the final step in the home loan process.

At closing, you’ll sign the mortgage loan documents, the seller will execute the deed to the property, funds will be collected and disbursed, and the closing agent will record the necessary instruments to give you legal ownership of the property

10 Steps to Closing on your Home

So you’ve finally found the perfect home, the seller has accepted your offer—perhaps after some negotiation — and now you’re eager to get your keys. Homeownership is right around the corner, but there’s one more hurdle to get through first: the closing process. A real estate closing typically takes 30 to 40 days to complete and includes everything from a home inspection to signing the paperwork that seals the deal. 

1. Deposit Earnest Money

One or two days after the seller accepts your offer, you’ll need to deliver your earnest money to a title or escrow company, who will hold it while the home sale is in progress. Earnest money is usually 1%–3% of the home’s sale price and is a deposit you pay to show the seller you’re committed to buying the home. If you back out of the deal for a reason that’s not covered in the contract, you’ll lose your earnest money. Learn more about earnest money

2. Complete your Mortgage Application

Once your offer on a home is accepted, you’ll need to apply for your mortgage. If you decide to go with the same lender that issued your pre-approval, they will already have some of the documents you’ll need for your application. You’ll likely only need to provide updated financial statements. If you move forward with a different lender for your mortgage, they’ll let you know what they need. All of this information will be reviewed by an underwriter to ensure you qualify for the loan you’re seeking.

3. Conduct Title Search and Order Title Insurance

A title is a legal document that shows the history of ownership of a home. After the seller has accepted your offer, an attorney or title company will review the home’s title to look for any problems that might prevent the home from being legally sold. Most importantly, they want to find out if anyone other than the owner has a claim on the home. They will then produce a title report with their findings.

Once you get your title report, read it immediately. You only have a few days after receiving it to review it. If you have a title contingency and you find problems on the title report that can’t be cleared up, you can use that contingency to back out of the deal.

If the title search is returned “clear of defects,” the title company or attorney will order a title insurance policy. This protects against financial losses in the event that a problem arises with the title after you buy the home.

4. Schedule Home Inspection

Most buyers choose to have a home professionally inspected before they buy it. An inspector looks for any problems that could be expensive to fix or make the home unsafe, such as structural, electrical, or plumbing problems, pests, or non-working appliances. An inspection can also give you a head’s-up about problems to keep an eye on after you buy the home. A standard inspection can cost $300–$400 or more, and you’ll need to pay this up front.

Work with your agent to schedule your inspection. Depending on the home’s location and condition, you may want additional inspections, such as sewer, termite, or roof inspections. You can usually attend these and ask the inspectors any questions that come to mind.

You’ll receive a comprehensive report about any inspection findings, which you can discuss with your agent and use as a basis to ask for repairs or seller credits at closing. 

5. Pay for Appraisal

An appraisal is an unbiased professional opinion of a home’s value, and can help ensure that you’re not overpaying for the home. Your lender will likely require a satisfactory appraisal before approving your loan. 

If the appraiser decides the home is worth at least the purchase price—the amount you’ve agreed to pay in the contract—you’re good to go. If the appraisal comes back too low, meaning the home isn’t worth what you’ve agreed to pay, you probably have a couple options. Your agent can explain them based on your contract. FHA, VA, and USDA loans use a different appraisal process, so check with your agent or lender for details.

6. Buy Homeowners Insurance

A homeowners insurance policy protects the value of your home and personal property against fire, theft, and other damage. At closing, most mortgage companies will require you to show proof of an insurance policy already in place. This serves as a temporary agreement between you and the insurance company that becomes permanent once you officially own the home.

Your lender can typically walk you through your homeowners insurance options. You can also shop around for insurance yourself to find a plan that best fits your needs.

7. Final Lender Approval

Loan approval can take a month or longer when closing on a house, so it typically comes through toward the end of the closing process. This is the last major piece that needs to fall into place for your closing to wrap up as scheduled.

8. Final Walkthrough

The main reason for a final walkthrough is to make sure the home is in the condition in which you agreed to buy it. The walkthrough should happen a few days before closing, after the seller’s possessions have been completely moved out. The home will look different now that it’s empty, but your focus should be on checking that any agreed-upon repairs have been made, and that nothing has gone wrong with the home since you last looked at it.

9. Gather your Documents for Closing:

The closing agent will send you a list of everything you need to bring to the closing. Often this includes:

  • Government-issued photo ID
  • Copy of your homeowners insurance policy
  • Copy of your contract with the seller
  • Home inspection reports
  • Anything else the bank requires to approve your loan
  • Cashier’s check for down payment and closing costs (unless you’ll pay by wire transfer)
  • Checkbook (to cover any miscellaneous costs)

10. Sign the Paperwork and Get your Keys!

You’ve made it to the last step in the house closing process: signing the final paperwork. Closings usually take place at a title company with a closing agent and any co-borrower(s). 

Once all the documents are signed and the payments are exchanged, the home is yours! You may be able to get your keys that day or the next day. 

Overview of steps to getting a mortgage

  1. Getting Pre-Qualified
  2. Income Verification
  3. Appraisal: Once you’ve found a house you like that fits your budget and have made an offer on it, a lender will conduct an appraisal of the property. This is to assess whether the amount you offered to pay is appropriate based on the house’s condition and comparable homes in the neighborhood. The cost of the appraisal will vary from a few hundred dollars to over a thousand, depending on the complexity and size of the home.
  4. Title Search and Insurance: A lender doesn’t want to lend money for a house that has legal claims on it. That’s why a title company performs a title search to make sure the property can be transferred. The title company will research the history of the property, looking for mortgages, claims, liens, easement rights, zoning ordinances, pending legal action, unpaid taxes and restrictive covenants. The title insurer then issues an insurance policy that guarantees the accuracy of its research. In some cases, two policies are issued: one to protect the lender and one to protect the property owner.
  5. Underwriting Decision: Once the underwriter thoroughly reviews your application, the best outcome is that you are approved for a mortgage. That gives you the all-clear to proceed to closing on the property.

What to expect when applying for a mortgage

When you submit a mortgage application to a lender, you’ll need to include extensive financial documentation, such as W-2 forms, pay stubs, bank statements and tax returns. When underwriting the application, the lender might come back to you with questions about these documents or requests for additional information. Responding to these requests quickly will help speed up the mortgage underwriting process.

What is Underwriting

Underwriting is a mortgage lender’s process of assessing the risk of lending money to you. The bank, credit union or mortgage lender has to determine whether you are able to pay back the home loan before deciding whether to approve your mortgage application, and does this through underwriting.

The underwriter then documents their assessments and weighs various elements of your loan application as a whole to decide whether the risk level is acceptable.

  • Lender will need about 6 weeks to collect, review, and verify
  • Collect these: former addresses, employers, income, liabilities, assets,

What Lenders typically want from you

  • Will usually want you to have 2 years of employments, record of paying bills, credit report
  • Lower credit score means higher interest rate
  • The higher your credit score the higher the grade of paper you qualify for and the lower amount of interest.