Under Contract - Now What?
Upon reaching mutually agreeable terms between the buyer and the seller our contract is considered “Ratified”. You will receive a PDF electronic copy of the ratified contract as well as a hard copy for your records.
The information you provided your lender up to this point was required to provide the pre-approval. Additional information will be required by your lender to begin the Formal Loan Application Process. I will provide your lender a copy of the Ratified Contract and we strongly encourage you to contact the lender immediately to begin the formal application. This information is provided to the Loan Processor who packages the information together and delivers to the Underwriter. Please keep in mind that until the Underwriter signs off on the loan, the loan is not completely approved. Additionally, it is not uncommon for the Underwriter to request additional information along the way. Examples of this might include statements from savings accounts showing deposits, withdraws from 401K accounts, etc. Do not panic if the underwriter requests the information. They are simply reviewing the information to ensure the marketability of the underlying mortgage.
Your lender will order the appraisal for the property (if required). In most cases, the appraiser will contact the listing agent to schedule a time to tour the property. This is the opportunity for the listing agent to provide comparable data, additional information about the property or surrounding neighborhood, and answer any questions the appraiser might have. Appraisals are generally returned to your lender within one week from the appraisal date. Please refer to the appraisal section of the Regional Sales Contract for detailed information on the contractual relationship surrounding the appraisal.
The home inspection is a critical process and should be performed as soon as possible after ratification. We work with several qualified and thorough inspectors and we will be happy to provide a referral upon request. It is important to keep in mind that the inspectors will report every possible condition that might need immediate attention or just a thought for the future. We will review the inspection report together line-by-line and draft our Home Inspection Notice Addendum.mSee the concierge contacts for information on local home inspectors.
It is very likely you will be required to have a 1-year homeowner’s insurance policy effective prior to closing on your home. Please contact the settlement attorney for more detailed information on your insurance requirements. He or she might require information from the insurance provider to process the settlement efficiently.Please do not wait until the last minute to arrange for homeowner’s insurance.
We will discuss with you some options regarding your settlement company. The settlement attorney’s job is to make sure the ratified contract is carried out to the letter on the day of settlement. As such, he or she “represents the contract” rather than any of the participants. The settlement attorney also makes sure the property has changed hands properly during previous transactions and that there are no outstanding liens on the property that might inadvertently convey to you – the purchaser. Some buyers ask if they should hire an attorney for settlement. In most cases, that is not necessary, although you certainly reserve the right to should you wish. All the forms you will sign at settlement (and there are many of them) are issued by either the lending institution or a governmental body and cannot be changed in anyway.
Title insurance is highly recommended (and often times required) and is purchased through the settlement company. Title insurance is basically a special type of insurance policy that protects the LENDER against things that might have happened in the past – rather than something that might occur in the future. In essence, an extensive search of public records is performed by the title company to validate who held title to the property in the past. The lender requires this information to ensure there are no liens, judgements, or easements on the property. Title insurance also guards against hidden risks or unknown factors that could affect you as the new owner - such as unknown heirs, forged deeds or wills, misinterpreted wills, or defects in recording previous title.Title insurance also covers the cost of the title search, and legal fees that might result from a dispute over past property ownership.
Prior to settlement (usually the day of or the day before) we will conduct your pre-settlement walk-through to ensure that the property is in substantially the same condition as when you signed the contract to purchase. We will also confirm that any repairs stipulated under the terms of the contract have been completed.If any items are outstanding we will inform the listing agent immediately.
It is recommendedthat you contact the utility providers and transfer utilities into your name effective the day of settlement. Pursuant to the Regional Sales Contract, the utilities should remain on in the seller’s name through the date of settlement.
The funds required to close will be provided to you on your Closing Disclosure. The ALTA Settlement Statement is the required government document that discloses all costs and fees associated with the transaction.