Buyers: making sure your closing happens on time

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Published Date 6/4/2019

We've all seen it. For weeks or months we glance over as a real estate agent's "for sale" sign stands at attention outside a house in our neighborhood. Balloons fly over the mailbox on weekends, when open houses take place. Then we see a "sale pending" sign go up. A deal must have been struck. Weeks go by, and we expect that sign to go from pending status to that word that makes all Realtors want to hoist a few — "sold." Instead, we see the pending sign come down. What happened?

Not sure how the term got coined, but that house "fell out of escrow." It's as if bad news dropped onto everyone's heads because one party or the other in a transaction didn't perform or a discovery was made that made it impossible for the sale to close. If you are the buyer, how do you protect your purchase and make sure you get to the finish line?

First, prepare yourself for the inspection, especially if the home is nowhere near new. Unless the home had been fully renovated recently, there WILL be some surprises in the inspection report. No matter how gorgeous the kitchen, how well kept the home, or how the sellers reassured their agent that all was well with the house, people don't know what they don't know. Even the owners. So go into the process with a realistic understanding that the condition of the home may reflect its age, especially behind the walls. It's a home with mileage. Expecting that new car smell at every point of the inspection will probably leave you disappointed when you're ready to drive it off the lot.

Just because the inspection uncovered a few troubling discoveries, don't think it's over 'til it's over. While the defects and recommended repairs end up on inspection reports can be a lot to digest, you have every right to expect a renegotiation for anything major. Your Realtor should be able to guide how much seller cooperation is reasonable, so it doesn't put your home purchase at risk.

Think of your purchase as a photo, where the photographer tells everyone one to smile and pose, but not move. That's how you should think of your pre-approved loan status (all cash buyers need not worry about this, of course). Your pre-approval should be a snapshot that is frozen in time, with no movement taking place until you are handed the keys the city. Hold off the "happy purchases," on credit like a new car, a bunch of new appliances you are dying to install, or a house full of new furniture. Even if you pay cash for those items, it has the potential to affect the very funds the lender used to show that you have additional savings beyond your down payment monies. Your pre-approval is based on your credit score and your debt-to-loan ratio and any noticeable change to those figures during escrow, and you could find yourself with no financing. This is all scrutinized one last time at the close of escrow, along with verifying the appraisal matches the sales price. Financing issues are a huge reason the "sale pending" sign can come down.

Lastly, don't get caught with your proverbial pants down when you go to sign on the dotted line. The last thing you want is to get to your closing and realize you forgot one of the documents you need. Take your driver's license, passport, or some other government-issued photo ID, proof of your homeowner's insurance, a copy of your sales contract for your own reference, any and all home inspection reports, paperwork the bank used for loan approval (your lender will tell you what to take), a notarized document giving you power of attorney if your spouse is on title and not at the closing, and a bank check or wire transfer for the full amount of your closing costs (another figure your lender will supply and you should have studied for accuracy before closing.) You may not need all of it, but if the escrow officer needs any of it and it's not readily available, your closing can drag on until it is provided. And if you've already got your moving van arranged, that can ruin the party. Of course, double-checking with your loan officers is always a good idea.

If you are unclear on any of this, ask your Realtor to sit down with you and explain each step along the way. Even if you bought houses other states and see yourself as a seasoned buyer, you may not be familiar with how things work in your new locale.

Source: TBWS

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LaVerne StMary

Sr. Mortgage Loan Professional

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Mortgages and Lifestyle

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