I must apologize for the immense delay in blog posts. I've gotten so caught up in the all things house related that I forgot to keep everyone updated of our experiences!! Let me go back a couple of months to after our inspection ...
I wanted to schedule our inspection for as soon as humanly possible after we got out of attorney review. It just makes sense - gives you plenty of time to review the report and see what you're going to ask them to fix and it also gives the sellers time to fix it! Our attorney told us that since we had such a short closing period that if the sellers agreed to fix something but isn't able to get a contractor out in time to do the work they'll open an escrow account for us. The seller will deposit the money it would be to fix the issues in the escrow account and then we can find a contractor and use that account to pay for his services. While that is a good fall back option it would just be way easier to have anything ready to go when you buy the house. You're already going to have the stress of moving, picking paint colors and decorating, buying furniture, etc. You won't want to deal with fixing the joists in the sun room or whatever issues your inspections turn up.
Another thing to keep in mind is while the sellers may think fixing the joists in the sun room or spraying for termites isn't a lot to ask for and has no problem fixing it, they'll still need to get someone out to the house and get an estimate before they give you an answer. A week after our inspection when we still hadn't heard (which took us to about 10 days before the closing date) I was starting to get antsy. We hadn't asked them to fix much and I couldn't understand why saying Yes or No was taking so long. It wasn't until after we closed when we saw the dates on the work documents they provided that it hit me. So just because it's taking a while to get back to you with an answer don't assume it's automatically a no.
I'll tell you now that the time between the inspection and your actual closing date will probably be one of the most stressful times in your lives, especially if you have a quick closing period. For us it was just one craziness after the next. First our attorney decided to go on vacation the week before we closed and not tell us. I only found out because I got an 'out of office' auto-reply to an email I sent that Monday. I wanted to cry and scream and throw up simultaneously. Her paralegal reassured us that she was on top of everything and we would be good to close on April 10th ... wait April 10th? Our closing date was set for April 9th? ... and here's craziness #2. Both attorneys had agreed to move the closing date to April 10th but had failed to tell anyone else. Not even the seller or their realtor knew (which did make me feel a little better). Yes in the grand scheme of things it's only one day, and yes it actually worked out better for us because my husband was off that day, but that's not the point!! Who changes a closing date and doesn't tell the main parties involved?!
Moving on to craziness #3 through 157 - all of which deals with the mortgage company leading up to our closing. We opted to go with Wells Fargo for our mortgage as they were recommended to us by our realtor. Since this is the first (and hopefully last) house I've ever bought I'm not sure how much of this is the "norm" and how much is because of Wells Fargo. The first and biggest issue I had during the entire closing process is - I've never done this before and you do this for a living, so maybe keep that in mind when I ask questions and don't treat me like a moron or an inconvience. Had someone explained to us what the general (as I'm sure every house buying situation is unique) step by step process would be I wouldn't have had to ask so many questions!! So for your benefit I'm going to run through how it was for us so you have a better understand of what will be asked of you after your inspection is done and you've decided to move forward.
Step 1 - After you've decided to move forward with the house you sign a bunch of documents that gives your mortgage company permission to look into any and all personal and financial files they can get their hands on.
Step 2 - Setting up the bank appraisal - basically the only thing you need to do during this step is give your mortgage company a CC# for the $390 fee for the bank to do the appraisal. Your realtor will be there with the appraiser so you're not involved in that. You will need to decide if you want to waive your right to receive a copy of the appraisal 3 days before the closing date. You will see the report eventually, this is just to waive your right to see it no later then 3 days prior to closing. I know when you hear anything related to "waiving your right" it's scary but really think about what will work best for you in this situation. For us it made sense to waive our right. Since we only had a couple of weeks after the inspection they scheduled the appraisal for as quickly as possible but if we wanted to see the report 3 days prior to closing we were afraid it might delay our closing date. Now it's important to remember that the bank will not give you a mortgage on the house if the appraisal comes in lower then what you're buying it for. So if there was an issue with the appraisal the bank will be the first ones to come to you and say there's a problem. They aren't going to lend you money on a property that's not worth it! And by law you will receive a copy of the appraisal at the time of closing. It all depends on what you're more comfortable with. In the end we received a copy of the appraisal way before the closing anyway.
NOTE: Now before we get to step 3 it's important to remember that up to this point you are not actually approved for a mortgage. You gotten a pre-approval that simple says with a quick background check and factoring in the money you make and the down payment you have you could in theory buy this house. It's not a firm approval.
Step 3 - A few days after you've given your mortgage company permission to delve into your backgrounds you're loan processor will get in touch with you. The loan processor will be your main contact from this point out. They'll tell you what you need to get them to help move the process along. I cannot say enough great things from our processor, Kim. She was such a delight to work with. A real breath of fresh air during this entire process. My advice to you is to get friendly with your processor from the beginning, it'll make your life much easier in the long run!! Ok so Kim got in touch with us about 10 days prior to our closing date. She said our loan was in review and she would let us know once a decision comes in if they need anything else from us. This is why I added the note before this step. When Kim said that to me my heart sank. I didn't understand what she meant - we had gotten pre-approved - what did she mean waiting on a decision? She explained it to me but had I known from the beginning this was the process I would have been a lot calmer!
Step 4 - After a few days your processor will get in touch with you again with your decision. Most likely you'll be approved with conditions, as we were. The "conditions" are usually just paper work and some explanations. For us it was:
1. Canceled rent checks from the past year
2. Home owners insurance declaration
3. Explanations of past addresses that showed up on our files.
Whatever it is that they ask for try to take some time and celebrate the fact that you were approved! Woohoo!!! = D
Step 5 - Home Owners insurance! As you can see from the above step this is something that the mortgage company will make sure you have before you close. Its extremely easy and painless to get. We started with Gieco since we had car insurance with them. Then we tried a few of the other big named companies - All State, State Farm, etc. Your best bet is to always combine your car insurance with your home owners as that'll give you the biggest discount. We ended up switching to State Farm for car insurance and getting home owners from them as their price was the best for the coverage we wanted. A good thing to note about Home Owners insurance is you'll need to pay the first year up front prior to closing. Going forward the mortgage company will take money out of your monthly mortgage payments and put it in an escrow account for you and at the end of your first year will use that money to pay for next years Home Owners insurance but for this first year you need to shell out that money now.
Step 6 - After you've given all your docs to your mortgage company expect them to come back a few more times and ask for other stuff. Our issue ended up being solely with my employer. They had filled out the form incorrectly and it needed to be redone. Then it needed to be redone again as white out was used the first time it was corrected. Then it needed to be redone again because when it was redone the second time a section was missed! Wells Fargo was calling my employer up to the day we closed asking for information! If you expect there to be some little issues here and there that pop up towards the end you'll be a lot better prepared to handle them. Pray for smooth sailing but expect a hail storm.
Step 7 - Money needed for closing. The money needed for closing was another major source of frustration. The money you have to bring with you to cover the balance of your closing costs and the rest of your down payment needs to be in the form of a bank check. So one would think they'd want to give you this information enough in advance so that you have time to get to the bank and get the check. Yeah, apparently not. They could careless about making things easier for you. The day before we were scheduled to close I'm begging the paralegal to give me the total. Finally she says to me just bring a check for X amount - that should be more then enough and then we'll give you a check back for whatever the balance is. I thought that was absolutely ridiculous but what choice did we have?! My advice to you would be to prepare yourself for that. Calculate what you think the closing costs will be in your mind, add 1000 to it to be on the safe side and round up to the nearest 1000. This way you'll have that cushion in case they pull something like this with you!
This takes us right up to the day of closing. This is a loooooot of information to take in so go back through and familiarize yourself with it a little more. Knowledge is power and the more you understand about the house buying process the easier your life will be!!
