CONGRATULATIONS! You have identified a house you want to buy, negotiated successfully with the sellers, and are “Under Contract”. Here are some words of advice, and some things you can expect to happen between going “Under Contract” and closing- that magical moment when the deed is recorded in your name and you become the new owner!
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BUYERS WHO ARE GETTING A MORTGAGE (if you are a cash buyer, you can skip this section)
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Do not use your current credit excessively, or open any new lines of credit- this can jeopardize your mortgage! The lender will pull your credit again just before closing, and that new furniture you bought on credit for your new house could possibly change your financial situation just enough to keep you from qualifying for the loan. If you feel you must use credit in some way, check with your loan officer FIRST. This includes adding anything excessive to the balance on your existing credit cards or opening any kind of new credit. Also, do not co-sign any loans with others until after the closing on your new home.
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You will be asked to provide more documentation throughout the period between contract and closing to the lender. Depending on the loan product you are using, it could be just a few things, or it could seem like a lot. Be as prompt as possible in getting these documents to the lender so the process doesn’t get bogged down, which could possibly delay closing. You might also consider using a lender such as Atlantic Bay Mortgage. They offer “upfront underwriting” and we are told that the underwriters are supposed to ask for all necessary documentation at the start of the process and not right before closing.
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Keep all documents on large deposits made into your accounts- you may need to verify where large deposits came from so keep any bills of sale or related information. The same applies to large amounts you move from one account to another.
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The Lender will order an appraisal of the property. You will be required to pay for this as part of your closing costs. If for any reason the contract is terminated, you will still be invoiced and expected to pay for this service because the appraiser has to be paid for the job he/she has done. You nor the Realtor have any part in choosing the appraiser- the lender handles this. The lender will also order a flood report and if the house is in a flood zone, you will be required to secure flood insurance in addition to regular homeowners insurance.
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Notify the lender if your salary or work compensation changes from the amount claimed on the application.Don’t quit your job, even if you have another lined up, without first speaking with your lender. In some instances, a job change could render you unqualified for the mortgage until you establish two years at the new job. The lender will verify your employment at the beginning of the loan process and again RIGHT BEFORE CLOSING.
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ALL BUYERS
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Most buyers want to have some inspections performed on the property. The buyer is responsible for the costs of the inspections they choose, and these costs are non refundable, however most buyers feel it is wise to make sure that the house and its systems are in reasonably good condition before closing. Your Realtor has vendors they work with that they can recommend for the inspections, and are usually the ones who set up the inspections, however, you are always welcome to choose your own inspectors. Visits to the house for inspections (or any follow up showings for you) must always be logged through the ShowingTime appointment center. The following is a list of possible types of inspections, and an ESTIMATED RANGE of costs for each- these prices are subject to change at any time, and different vendors charge different amounts for the same inspection- you do not HAVE to have any of these inspections performed- you may choose all, none, or some:
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General Home Inspection. This is a fairly comprehensive review of the structure (including foundation and roof), plumbing systems, electrical systems, and appliances. $350-$550
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Radon Inspection. Radon gas build up in a home has been deemed a health concern by the US EPA, and our area has many homes where this is an issue. A test is performed that measures the amount of radon, and if it is above the limit, radon mitigation is recommended. Test usually costs $100-$125 and takes two days at least.
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Septic Inspection. The inspection includes digging down to the tank lid and pumping the tank and checking for problems with the tank, as well as an inspection of the drainfield looking for any signs of system failure. $400-$500
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Survey. A licensed surveyor will check deed records of the property and neighboring properties, and make detailed measurements of structures found on the property and plot them in relation to each other and the property line. The survey will also show any deeded rights of way or easements. They can also flag the boundaries on the ground so you will know where the property lines and corners are. A survey will uncover any possible encroachment onto or from a neighboring property. Surveys usually need to be scheduled far in advance. Your Realtor can check to see if a recent survey has been recorded. The cost of a survey can vary so widely that you will need to get a customized quote.
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Well/water inspection. If the property is served by a city or community water system, the water will already be tested regularly, and most buyers do not opt to test a public water supply. However, if the house has a private well, you may opt to have the water tested for bacteria only, or bacteria and heavy metals. Some federally backed loans have requirements for water testing. $60-$200
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Pest inspection. Pest inspectors look for evidence of wood destroying insects (like termites and carpenter bees) as well as issues with mold or fungal growth in basements and crawl spaces. $125-$175
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Chimney Inspection. An inspector will inspect the chimney looking for cracks or problems with the flue, or problems with the chimney cap. They also inspect the firebox if accessible (i.e. not obstructed by a woodstove or other insert) and damper function. $150-$200
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The inspections listed above sometimes suggest further inspections based on their findings. These may include contractors, engineers, etc.
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UTILITIES Sometime before and close to closing you will need to contact all utility providers and arrange to have the service transferred, or begun, in your name. Your Realtor can help with figuring out which providers serve the home you are buying.
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INSURANCE All mortgages require homeowners insurance, and even cash buyers would be wise to fully insure their new homes. You may shop around to get the best deal you believe you can. Sometimes, the same insurer who covers your cars will give a discount on cars and home if you bundle all policies with them, so it might be smart to check with them first.
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ATTORNEY In North Carolina, real estate closings are handled through real estate attorneys. For buyers, one of the most critical things they do is perform a title search to look back in time at the history of ownership of the property to ensure there are no “clouds” on the title. This sometimes involves liens, like mortgage liens, or tax liens, and they will ensure that the previous liens will be paid off prior to your taking the deed to the property. It could also uncover an improper or incomplete transfer from a previous transaction. The attorney will procure title insurance on your behalf. If you have any questions about these matters, please speak to the attorney about them. $950-$1250 (this amount does not include the title insurance premium)
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