After dancing around hysterically once your home mortgage is approved, it's time to step into high gear to make sure your escrow closes on time and you're ready to move. Your real estate agents and escrow officer accept the heavy-lifting jobs, but that doesn't mean you're off the hook. The time between the mortgage approval and the final signing of the grant deed that turns the sale house into your new home is critical to closing the sale.
The escrow team is the heart of your home sale. Your escrow agent wrangles all paperwork, signatures and documents. If your agent routinely fails to deliver, ask the escrow office manager for a replacement. Once your mortgage is approved, your officer makes calls and sends texts, snail-mail letters and emails to push everyone involved in the sale to do the job. The messages request proof of required repairs on your new house and certification of the termite inspection and treatment, if required by the lender. The requests also ask for required documents to close the escrow, including title reports and loan paperwork. You'll need to buy homeowner's insurance and bring your policy to your escrow officer. Your escrow agent also creates the formal legal documents, including any amendments required by either buyer or seller.
Underwriting is the process of investigating your financial background to qualify you for the loan. Your underwriting team also investigates your dream house before agreeing to your mortgage. The house must undergo a formal evaluation by an independent appraiser to prove the house is worth the sale price. After the official loan approval, your bank gives you a copy of your appraisal report. Once the mortgage has the official lender approval, your lender also asks you to sign the official loan documents. You'll need to initial and sign countless papers and also review a formal lender disclosure required under federal law. Your loan representative must answer any questions you have about the loan and the disclosure. This process ensures you don't enter into this major financial commitment without understanding the impact on your life for the next few decades.
Between the mortgage approval and the escrow closing giving you the keys to your new house, workers must complete any home repairs. This work could be significant, if the house has major insect damage or any problems with the roof. Lenders only fund loans for homes with secure roofs. Many lenders require treatment and repair of termite damage, particularly in areas with warm climates with the possibility for year-round termite infestations.
During the final days of the escrow process, you'll need to physically go into the escrow office to sign paperwork and bring certified checks for the money you owe for your new house. The cash includes the amount to meet your down payment and any required tax payments. The last signing job for buyer and seller asks both to come into escrow to sign the document to transfer the grant deed from the former owner to the new owner. After signing all escrow paperwork, your escrow officer, attorney or your real estate agent, depending on the real estate representative laws in your state, hands off your new house keys, any security codes and garage-door openers.
- Chicago Tribune: How to Avoid a Disastrous Closing
- California Department of Real Estate: Principal Instruments of Transfer
- Chicago Tribune: Stack of Closing Documents Often Goes Unread
- Realtor.com: What is Escrow
- Nolo.com: Deeds FAQ
- FHA Home Loans: FHA Loan Underwriting Process
- Board of Governors of the Federal Reserve System: Press Release
- California Department of Real Estate: Mortgage Loan Disclosure Statement -- Good Faith Estimate
- Office of Thrift Supervision: What to Expect When You Apply for a Mortgage Loan
- U.S. Department of Housing and Urban Development: Frequently Asked Questions
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