An offer was made, it’s been accepted – time to close on your home
You run into a friend at the grocery store and she starts telling you about an amazing experience.
“There were ups and downs, twists and turns – and a loop-the-loop right at the end,” she says.
You think she’s talking about a wonderful amusement park ride.
“But we made it,” she says. “We made it through the process and we bought our dream home. We’re so happy!”
While the home-buying process certainly isn’t like that for everyone, it can at times seem like a roller coaster ride.
The answer to all those questions is “sometimes.” But after the twists and turns – and perhaps an uneasy moment or two – at the end of the ride, most people look back and think, “That was an amazing experience.”
The fact is, buying a home can be full of all sorts of emotions, but there’s no need to feel intimidated or overwhelmed.
“If you go into the home-buying process knowing that there will be natural ebb and flow, it makes it much more enjoyable,” says Kelley Harwood, Vice President of the Consumer Lending Group at First National Bank.
“Knowing that and understanding the process will make the experience a much more enjoyable event in your life. And when you have a mortgage loan expert you trust to help guide you through the process, you will have a better idea of what to expect.”
Below, we look at a few of the common issues that might pop up toward the end of the home-buying process, where the twists and turns often appear. Knowing that they might be coming gives you a hand up in the process.
Before a bank gives final approval for a home loan, there needs to be an appraisal of the home you wish to buy to determine the current value of the home, since the home is the collateral for the loan.
The appraisal covers everything from measuring living space and confirming the year the home was built, to assessing working condition of plumbing, heating and air conditioning. The appraiser will also compare the property to recent home sales in the area.
There is typically a cost for the home appraisal, which averages between $300 to $600.1 It’s typically paid for up front by the buyer or seller, or it can be added into the home loan, too.
“Sometimes the appraised value is lower than the agreed upon purchase price,” says First National Bank’s Harwood. “It can happen when a homebuyer gets in a bidding war for the home, or because the buyer has an emotional attachment to a particular home, and that might lead them to offer more than the home’s current market value.
“But there are solutions, which include asking for another review of the appraisal, or perhaps renegotiating with the seller to lower the price.”
Regardless of the solution you choose, having a mortgage loan officer you trust is vital.
Making sure the home is insurable
If the home you wish to buy isn’t insurable, you won’t be able close on the house – unless, of course, you’re paying cash, which doesn’t happen very often.
Why would a home not be insurable? Perhaps there was water damage in the past and the previous owner filed a major insurance claim. That will show up on insurance records and your insurance company may refuse to insure the home. It’s best to check ahead of time.
The dreaded tax lien
It doesn’t occur often, but there are cases where you discover at the 11th hour that the seller can’t actually sell the home because there is a significant tax lien against the seller and the property. In this case, the seller needs to pay that tax lien before you can buy the home.
Again, this is an infrequent occurrence, but it does occasionally happen. This is yet another reason to have a mortgage loan officer on your side. They will work with you to make sure these things are looked into so that when you get to the closing there are no surprises.
Cue the theme from ‘Jaws’ – it’s the walkthrough
Dun-dun, dun-dun. Dun-dun, dun-dun. Just when you thought it was safe to breathe a sigh of relief – it’s time for the walkthrough.
It might have been weeks since you’ve been inside the home you’re about to buy. But this is when you want to make sure this is the same home you put your offer on weeks ago.
Are the appliances that the seller agreed to leave behind still there? What about the equipment for the fireplace or whirlpool? Did the seller leave everything they were supposed to leave with the home?
Did the seller fix that leaky faucet? And the top step on the backyard deck? And the outlet in the kitchen? As you take your final walkthrough, you want to be sure the seller has made the fixes they said they would.
But what happens if they haven’t?
“You can have your realtor call the seller’s realtor and make sure those things are taken care of before you close on the home,” Harwood said. “The seller can also set aside escrow funds for repairs that won’t be done prior to closing.”
Bottom line: The sellers shouldn’t get paid until those repairs are completed.
Time to celebrate!
You made it to the end of the ride. Congrats! At this point, it may feel like you should get a free t-shirt that says, “I survived the closing!”
“As I mentioned before, knowing that there may be ups and downs in the home-buying process will better prepare you for what might be ahead,” says Harwood. “Knowing your mortgage loan officer has your back on this wonderful ride makes all the difference.”
Got questions? Stop by your local First National Bank branch today and visit with a mortgage loan expert. (They love explaining home loans. Seriously, it’s their thing.)
1 “Mortgage Appraisals and Appraised Value,” https://www.thetruthaboutmortgage.com/appraisals-and-appraised-value/