+ Make an offer.
A REALTOR® can be a valuable resource to have on your side as you determine the appropriate initial offer to extend. During this part of the process, you'll want to consider the following:
- To add extra weight to your offer, you'll want to provide the prequalification letter from your PrimeLending loan officer. Sellers obviously prefer an offer with financial security.
- You'll want to have money ready to use as an earnest money (or "good faith") deposit. While the amount varies depending on your location, all of it will be placed into an escrow account until the purchase transaction is complete
When you're offer is accepted, here’s what you’ll need:
- Review the loan commitment with us and be sure you understand your loan's rate terms and any additional requirements or details.
- Obtain homeowner’s insurance and, if required, flood insurance.
- Using your loan commitment and purchase agreement as guides, set a closing date and time.
- Verify with the closing agent or attorney that a property survey was ordered.
- Prepare to move by making a checklist of necessary actions and setting timelines.
- Do a final inspection of the home you are about to purchase.
- Confirm that you have met all the guidelines and conditions in the purchase agreement established by the seller. The purchase agreement is detailed below.
- Bring the total you owe in closing costs in the form of a certified or cashier’s check to your closing appointment. Typically, personal checks and/or cash are not accepted.
+ The Purchase Agreement
Money has now officially changed hands, and you’re getting closer to the end. You will now need to finalize the purchase agreement, a legally binding contract between the buyer and the seller of the property that outlines all terms and features of the final transaction. This can include:
- The property address and legal description.
- The sales price and the loan, down payment and deposit amounts.
- The names of all parties involved including the buyer, seller, buyer's agent, seller's agent, mortgage broker/banker and any attorneys.
- Time limits that might apply to the transaction.
- Any contingencies that must be addressed prior to the deal being complete and finalized (such as the sale of the buyer's present home, issues from the home inspection that might need to be repaired, etc.).
Because every home transaction is different, these contracts are not exactly uniform. A REALTOR®, a title company or an attorney may assist in the negotiations and execution of a purchase contract; this is dependent on the state in which the transaction is being conducted.
+ Closing your loan.
Closing day is an exciting time because it’s the day you will finally see your dream of homeownership realized. It can also be a hectic time since there are a lot of details to manage. Here is a summary of how the home loan closing process works.
At PrimeLending, we will take the time to address your questions and guide you to a better understanding of how closing on your mortgage will work.
+ Closing Costs
Although they tend to vary by lender, closing costs range from 2 to 7% of the home’s purchase price, and include three basic categories:
- Prepaid Expenses: includes homeowner’s insurance, mortgage insurance and the costs to set up an escrow account. Because they vary based on the type of property and the time of the closing, prepaid expenses are difficult to determine.
- Discount Points: A discount point is equal to 1% of the mortgage loan amount and helps reduce the loan’s interest rate. For example, a $100,000 mortgage might be obtained at 7.75% with 2 points, or at 8.25% with no points. The lower interest rate would cut the mortgage payment by about $35 a month, but would require $2,000 — or 2 points — up front at closing.
- Out-of-Pocket Expenses: Fees for appraisals, attorneys, credit reports, deed recording, tax services, home inspections and appraisals, and other miscellaneous expenses make up the out-of-pocket expenses.
+ Who Will Be at the Closing Table
The number of people who will attend your closing depends on many factors, including the state where the property is located, the property type and more. At the closing, in addition to you, the people attending may include:
- Your attorney (if you have one)
- The seller(s) (if you are buying a home)
- The seller’s attorney (if they have one)
- Both real estate professionals (yours and the seller’s, if you are buying a home)
- The builder’s representative (if a brand-new home is involved)
- The closing agent (which could be a representative from the title company or a real estate attorney)
- A notary public
+ Steps in the Closing Process
The closing can be held at the title company’s office, your lender’s office, a real estate attorney’s office or other agreed upon location, depending on the circumstances.
Here’s a review of what will happen at closing:
- You’ll review and sign all of your loan documents. Make sure that each document is explained clearly and that you understand the term to which you are agreeing. If something is different than what you expected or agreed to, don’t sign until the issue is resolved to your satisfaction.
- You’ll give a certified, wire or cashier’s check to cover your down payment (if applicable), closing costs, prepaid interest, taxes and insurance.
- Your lender will distribute (wire) the funds covering your home loan amount to the closing agent.
- Depending on your loan terms, you may also be required to set up a new escrow (or impound) account with your lender, so you can pay your property taxes and homeowners insurance along with your monthly mortgage payment.
+ Closing Paperwork
The main focus at a closing is to sign the final paperwork. The three main items to review and/or sign during closing are:
- HUD-1 Settlement Statement: The itemized list of the final credits and charges, for both you and the seller, based on the terms of the contract. You should receive a copy of the HUD-1 at least one day prior to the closing for your review.
- Deed of Trust or Mortgage: The documents in which you agree to a lien on your property, as security for repayment of your home loan.
- The Promissory Note: The mortgage promissory note is a legal “IOU” that represents your promise to pay the lender according to the agreed terms, including the dates on which you must make your mortgage payments and where they must be sent.
+ What to Bring to Closing
- A cashier’s check made out to the title company to cover closing costs. The title company will accept wires as well. Cash, personal checks credit cards won’t be accepted.
- Government-issued identification card with photo for the notary.
- If you are uncertain about what to do at any point of the loan process, please contact us for guidance or to answer any questions.