Your efforts have finally paid off. You submitted your loan application some time ago and received your preapproval letter. Your credit was reviewed and income and assets verified. Shopping for a home with a preapproval letter in hand gave you the confidence you needed knowing that all you need next is a property address. You found a home, there was a little back and forth between you and the sellers but you ultimately agreed upon a price and the contract was signed just today. Your sales contract shows the closing date is just 30 days away. What goes on behind the curtains during this 30 day period?
On your end, you’ve already done the heavy lifting. Now it’s time to sit back and wait for your settlement date. Because you’ve already submitted all the necessary paperwork there’s really not much more for you to do except wait. But once that signed contract was submitting, the wheels really begin to turn from not just your lender but various third party service companies as well.
The first thing you’ll want to do is order a property inspection. Your real estate agent can provide you with a list of companies who will inspect the home from top to bottom. If there are any issues with the home, you’ll find out near the very beginning giving you time to decide what to do about any discovered issues. The property inspector is very thorough. From checking out the over, plumbing and waste disposal to flipping the light switches making sure all the lights work properly. Some of the items are very minor such as a light bulb that needs replacing while others might be serious enough to derail the purchase entirely. Your inspection report will be delivered to you within a matter of days.
Your lender will order a title report. Within a few days, the report will be prepared. The report will show the chain of ownership and if there are any outstanding liens against the property that need to be addressed. Once the inspection has been completed and approved, the lender will next order the property appraisal. Depending upon current market conditions, you should receive the appraisal in a matter of days. There are two basic types of appraisal, an Automated Valuation Model, or AVM, which digitally researches recent sales of similar homes in the area you’re buying in. A full appraisal means an appraiser will physically visit the property, take pictures and look up recent sales of homes in the area that will justify the price you and the sellers agreed to.
Once the lender has completed the loan package, it then goes to the lender’s underwriter. At this stage you’re probably looking at about 5-10 days in. Again, depending upon loan volume, your loan could be approved in a day or two. I will be able to update you on current underwriting times. There may be some additional items needed or questions answered during the underwriting process, so respond promptly to any queries.
When your loan is completely approved and all loan conditions satisfied, loan papers will be prepared. If you haven’t locked in your loan, it’s time to do so now. Your loan papers cannot be printed until your rate is locked in. Your loan documents will be digitally transmitted to your settlement agent. The settlement agent will put together a final tally of closing costs as well as your down payment for a final figure. You will attend your settlement and sign your closing papers.
Finally, it’s also a good idea to sign your papers a few days before your closing. If there are any issues or questions, that gives you enough time to address any issues and still close on time. When both the buyers and sellers have signed, the settlement agent returns to the closing papers to the lender who will review the signed paperwork. On the settlement date listed on the contract, the lender will release the funds on the 30th day.