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How The Deal Gets Done- Closing on Your New Home

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How The Deal Gets Done- Closing on Your New Home Powered By Docstoc
					A lot has to happen before you can close on a new home successfully. Some of it is
your responsibility, and some of it belongs to others. But don 鈥檛 expect it to
happen overnight or perfectly smoothly. There are too many factors involved. And
there 鈥檚 a lot of money riding on the deal, too 鈥攏 ot all of it yours. So the wisest
thing to do is take care of everything at your end; dot every 鈥渋鈥?and cross every
鈥渢鈥?that you can from your end of things. And be picky, picky, picky about who
you 鈥檙 e doing business with; from the get-go, choose only the most experienced,
successful professionals and companies that you can find. They have what it takes to
make the long, complicated process considerably more bearable. For example, if it 鈥
檚 possible, it 鈥檚 a good idea to go with a Texas-based lender, because of Texas
real estate laws, some of which differ from that of some other states. An out-of-state
lender might make some mistaken assumptions that could add to delays.
  For most homebuyers, pre-qualifying for a home loan and signing a contract are
major steps. But that 鈥檚 just the beginning of the journey towards home ownership.
And the rest of the trip can sometimes make or break the deal. It 鈥檚 during this
period that the lender is trying to complete the financial package, the title company is
doing the necessary research, surveys and appraisals are put into motion, and the
homebuyer orders home inspections and obtain homeowners insurance. Anything that
goes wrong at any of these stages could mean delays 鈥攐 r even a broken deal.
  As a homebuyer, you need to know that pre-qualifying for a mortgage loan 鈥攁 nd
actually qualifying for it 鈥攁 re two very different things. You also need to know that
the difference between the two can definitely affect the closing date. To get
pre-qualified, a homebuyer must meet with the lender and have essential information
(Social Security number, income, etc. at hand). Then, after checking your credit score,
income, and employment, the mortgage lender writes up a document 鈥攂 ased upon
this preliminary information 鈥攖 hat states what size of loan you might qualify for.
Remember, this is not a final conclusion or a mortgage loan approval 鈥攊 t 鈥檚
really only the lender 鈥檚 鈥渆 ducated guess 鈥濃€攕 o don 鈥檛 start counting
your chickens just yet! As a matter of fact, many lenders these days are encouraging
homebuyers to skip pre-qualification and go directly to qualification 鈥攂 efore they
start looking at homes 鈥攐 r, in many cases, even before the contract is signed.
  That 鈥檚 because the actual qualification process is much, much more extensive
and in-depth. Typically, it involves giving the lender accurate information, W2 forms,
bank statements, tax returns, and proof of income. All this goes through the lender 鈥
檚 approval process, which can take a fair amount of time. That 鈥檚 because the
up-to-date accuracy of the information you 鈥檝 e given them is checked and
double-checked at this time. So be sure of your facts and figures, because any errors,
inconsistencies, credit problems, or misinformation could definitely put a damper on
things at this point.
  Things a homebuyer should know. Or expect. Or do.
  * Lenders should give buyers a good-faith estimate of how much money to bring in
鈥攂 y certified check 鈥攖 o the closing. Closing costs typically run about 3 to 6
percent of the loan amount.
  * One business day before closing, you have the right to inspect the Uniform
Settlement Statement. This itemizes the costs of all services you must pay at closing.
  * The lender is also responsible for giving you a truth-in-lending statement that
states all the details about the cost of the loan.
  * The title company 鈥檚 job is to research public records and verify that the buyer
and the seller don 鈥檛 have any lawsuits, liens, or judgments against them or the
property.
  * One of the real estate agent 鈥檚 jobs is to stay in contact with the title company
during the research phase, just to make sure that any problems that might surface are
dealt with promptly. It 鈥檚 important to avoid last-minute surprises, which could
lead to delays on closing.
  * Before closing, the smart homebuyer should order inspections on the house and
property to make sure that everything is in good shape and that no major repairs are
required. Repairs could change the agreed-upon price in the contract. The homebuyer
should be there with the inspector when it 鈥檚 done. Why? Because an inspector 鈥
檚 report can be 10-12 pages long and full of technical jargon, so being there to ask
questions and get on-the-spot explanations can really help you get a grip on the
situation. The cost of an inspection can vary; it depends on the location of the house,
the size of the house, and what kind of foundation it has. By the way, a termite
inspection also needs to be ordered by the homebuyer before the closing. If an
inspector is not certified in this area, another inspector will have to be hired.
  * Homebuyers are responsible for getting homeowners insurance and have proof of
it at closing. The Texas Department of Insurance says buyers should expect to pay
about $400 to $1,000 a year for insurance 鈥攁 nd possibly even more if the home is
in a flood zone. Most lenders will recommend an escrow account where funds for
insurance and property taxes are automatically set aside each month.
  * The lender will require hazard and liability insurance for at least the amount of the
loan. At the closing, you 鈥檒 l be expected to pay the first year 鈥檚 premium for
this insurance.
  * The homebuyer should schedule a final walk-through of the house right before the
closing. It would be a good idea to do the walk-through with your real estate agent.
You want to make sure that the house is in the condition that you agreed upon in the
contract. Remember, once the closing is done, you 鈥檙 e the owner of the house 鈥攁
s is. You no longer have any legal power to get the seller to fix anything, and the seller
no longer has any legal responsibility to do so.
  * A settlement agent 鈥攗 sually the title insurance company 鈥攊 s the one who
usually sets the time and place of closing.

				
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