Contract to Close
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Contract to Close Checklist
Buying a home is a large undertaking with many small details that, when looked at from a bird’s eye view, can make the whole process feel overwhelming.
Fortunately, breaking the process down into granular steps makes it easier to understand and take on. We created this page as a simple checklist to follow from the moment you sign a contract to the day you close on your new home.
Mortgage Approval Process
There are many Dos and Don’ts to being approved for a mortgage. Here are the basics to remember:
DO: Get Your Finances in Order Before Entering a Bank
Buying a home isn’t usually an overnight decision. Often, months of conversations and considerations happen before anyone walks into a bank to inquire about a mortgage. As soon as your conversation about buying a home becomes serious, you should begin preparing your finances. Put some extra effort toward raising your credit score and growing your savings. You’ll thank yourself when you’re finally approved for a low-interest loan.
DO: Understand Local Comps
Once you’ve been pre-approved for a loan and chosen neighborhoods you’re interested in, research comparable sales (also called “comps”). This means finding out what other homes have sold for recently within the same area so that you can make an offer within 3% of the values of the similar, recent sales. By placing an offer this way, you have a greater chance of your bid being accepted.
DO: Ask A Lot of Banks
Remember: procrastination limits your options. Set aside the time to seek loan offers from several banks. Compare their mortgage offerings to ensure you end up with the best terms and lowest possible interest rate.
DO: Include a Financial Contingency in Your Contract
The first contract you’ll sign with a homeowner will likely be a contract to buy. This is not the purchase itself, but does put you in motion to purchase said property. In that case, it is good to have several contingencies within the contract that make it easy for you to back out should anything problematic occur. A financial contingency, which protects you from being required to purchase the home if you cannot secure a mortgage loan in time, is a smart element to include.
DON’T: Get a Home Contract Before You’re Pre-Approved for a Mortgage
Even though financial contingencies can sometimes safeguard you from losing a lot of money, they can’t protect you from wasting your own (not to mention the homeowner’s) time. Get the pre-approval so you know your budget before you enter the real estate market.
DON’T: Skip the Research Process
Learn about your financial options. Veterans Affairs, for example, offers certain aid to military homebuyers. Florida offers its own help to first-time homebuyers. Do your research so you don’t miss out.
DON’T: Forget to Research the HOA Requirements
When buying a condo or townhouse in an HOA community, sometimes their communal laws require a higher down payment, depending on what the community has in reserves. This is important to know upfront because sometimes the down payment can be as high as 25% of the condo/townhome value.
The Week After You Sign the Contract
Keep our Contract to Close Checklist Handy
No matter how carefully you think you’ve inspected the home, hiring a home inspector to provide a professional assessment is always a good idea. They have a trained eye for locating cosmetic and structural damages that you and I might not recognize.
Hiring a home inspector is a relatively low cost that can save you a lot of money and heartache in the situation that they find something expensive that needs fixing. The findings of your home inspector can even be used as the second round of negotiations. If they found issues on the property that were not mentioned in the disclosure, then those issues are grounds for more negotiating. A buyer can save money on those repairs.
Hire your home inspector as soon as you have a home contract so that you uncover all property damages early in the process.
Schedule the Appraisal
This part goes hand in hand with being approved for a mortgage. The lender will want to appraise the home before they approve the loan they’ve offered you for the property. This means the sooner you can schedule their appraisal, the better.
The bank will is a commitment letter to the buyer, which can be used as another point of negotiation in the case that the bank discovers problems regarding the home.
2-4 Weeks Before Closing
Like applying for a mortgage, if you procrastinate any of these three steps, you limit your options. If you want a better experience at a lower cost, schedule the movers and research homeowners insurance at least a couple weeks before moving day.
Find and schedule the movers
Whether you’re moving yourself or hiring a company, having a plan of action alleviates the stress of moving day.
Find Homeowners Insurance
You’ll want to know what’s required in your community. For example, many homes near the ocean in Florida require wind and flood insurance coverage, on top of regular property policy.
Final Steps on our Contract to Close Checklist (Closing Week)
The home is almost yours! This might be the last time you walk through the house before it belongs to you, which means it’s your last chance to notice egregious flaws that should be corrected before the closing.
This includes several steps: Collecting the official mortgage check from your bank, working with an ESCROW agent (if applicable), and making sure personal finances are ready for any unexpected expenses that might arise with everything going on.
Also, know what is expected from you regarding closing costs. In Palm Beach County, the seller actually covers the closing costs. Only a few miles away, in Broward and Miami-Dade County, however, closing costs are paid by the buyer. Know what’s expected of you months prior to closing week.
Download our Contract to Close Checklist
I’ve Got Your Back
Working closely with a seasoned real estate agent can take a lot of the responsibility of knowing what’s next off your plate.
If you’re in the market for a home, I’d love to help you navigate the information and processes so that you smoothly find a South Florida home you love. Get in Touch!