Once you have made an offer on the house and have paid an earnest money deposit, the next step is going to be shopping for a mortgage lender through the title escrow process. When you’re applying for a mortgage, the lender is going to order an appraisal on the property. This appraisal is necessary to protect the lender and ensure that the loaned amount is appropriate based on the value of the property being purchased. They want to make sure that if you are unable to pay off the mortgage, they can recoup all of their losses from the resale of the property. If the appraisal does not match the agreed upon price of the property, two things can happen. First if the appraisal comes in above that price, you as the buyer will benefit from the home having more equity than you originally thought. Secondly, if the appraisal is lower than the price, then renegotiation may be necessary. Your lender can not approve the loan unless you either lower the price with the seller or agree to make up the difference by paying cash down.
A home inspection is not mandatory during the title escrow process, but it is highly advised that you have one done to get a deeper insight into your potential new home. You should order inspections to ensure that the home’s structure, plumbing, heating, air conditioning, and electrical systems are working in a normal fashion. Hopefully, all the inspection does is reassure you that you are buying a great new home with a few minor repairs that may be necessary. However, if the inspector finds some bigger things that need repair or replacement, you can negotiate with the seller to have them taken care of. Repairs or replacements that need to happen become a condition of closing that the sellers must meet to complete the sale. Home inspections are extremely important not only to make sure that you don’t miss anything that could present costly consequences to you in the future, but also to learn from the inspector what systems are present and the ways to maintain them. Your lender may also require you to have wood-boring insects and normal water quality inspections done.
If there were any contingencies made with your first purchase offer, then they must be removed in writing by the designated dates. These contingencies could have included things like securing financing at a certain percentage rate, the results of the appraisal and home inspection, and that any problems with the home will be fixed.
Final Walk-Through and Paperwork
Before everything is completed and you get the keys to your new house, you will have one final walk-through of the house. You’re looking to verify that the condition of the home hasn’t changed since the seller accepted your offer. This can include making sure all agreed upon repairs have been made, and nothing has been removed that was supposed to stay – like appliances. Then at title closing, you will be presented with many documents that you have to sign. These final documents can include things like confirming mortgage rates, title insurance, payment to the title company, and state and county recording fees. After closing the buyer will receive the keys to their new home and after recording, the money will be disbursed to the seller. If you have any questions about title escrow or title closing, or would like more information, reach out to Mathis Title at (703) 865-7880.