Congratulations, all your hard work has paid off! The closing is a huge milestone in purchasing your home and if all the documentation has been completed correctly, the closing should almost be a formality. You should expect the closing to take 1-1.5 hours.
The people that may be present at the closing are:
- Buyers with their attorney
- Sellers with their attorney
- Realtors for either side (optional)
- Title Insurance agent (optional)
- Mortgage agent (optional)
Those listed as optional may or may not be present at the closing depending on the paperwork and everyone’s schedule. Don’t be surprised if only you, your attorney, and the seller’s attorney is present, but everyone listed above may still attend.
Prior to the closing your attorney will communicate the checks you will be signing:
- Your attorney fees
- Recording fees
- Remaining down payment
- Utilities costs
- Transfer Taxes
During the closing, your attorney will guide you through all the paperwork you are required to sign. There will be several documents to sign by both the seller and the buyer. Once all the documents have been recorded and all the payments have been submitted, you are now a new homeowner!
Please remember that Sawyer Savings is here for you THROUGHOUT your mortgage experience. We’re here to answer your questions before, during, and after your closing. We appreciate your business and look forward to servicing you and your financial needs now and in the future.
Homeowner’s Insurance is one of the last, and sometimes overlooked, conditions you’ll have to satisfy for your mortgage. Homeowner’s Insurance is a policy that typically covers losses to one’s home, its contents, and personal property as well as liability insurance for accidents that may occur at the home. Contact your insurance agent to open a homeowner’s insurance policy. Similar to other types of insurance, homeowner’s insurance has options for the level of coverage and an agreed upon deductible. A homeowner’s insurance policy typically covers damage caused by:
- Water damage from plumbing, appliances, and heating /cooling systems
- Fire and smoke
- Severe weather
If it has been determined that your home is in a flood zone, you will also be required to get Flood Insurance as a homeowner’s insurance policy does not cover water damage from floods. In addition, depending on the insurance company, homeowners may have the option to select the following additional coverages:
- Water damages caused by a backed up drain or a broken sump pump
- Valuable property such as antiques, jewelry, or sports equipment
- Yard and landscaping items and equipment
- Electronic data recovery
This may be a good time to see if your insurance agent can bundle your policies (homeowners, car, umbrella, etc.) together to reduce your premiums. Regardless which policy you select, you will be required to pay for the first year of coverage up-front while subsequent years will be included in your escrow portion of your mortgage payment to Sawyer Savings (not all insurance is escrowed, flood is required to be).
When you apply for your mortgage Sawyer Savings will order certain services to complete the process. First, Sawyer Savings gives your loan package to a Sawyer Savings processor. They may request additional information from you if needed and will also supply you with certain disclosures required by law. The processor will request an appraisal, which determines the current value of your future home. The appraisal is beneficial for both the bank and the buyer as it protects a potential buyer from paying too much for a house and gives the Bank a value on the collateral for your loan. This is not the same as a home inspection and does not replace it.
The processor will also request Title Insurance, which covers issues that occurred before the closing:
- Improperly recorded or forged legal documents
- Liens from contractors, taxing entities, or previous lenders
- Property survey errors
- Building code violations by a previous owner
- Claims by co-owners who didn’t sign off on the sale
Title insurance will not cover issues after the closing such as not paying contractors for completed work on the home, illegal home additions, or eminent domain. Please address any questions you may have on Title Insurance with Sawyers Savings or your attorney.
The processor will also verify employment, your assets, and get your file ready for the underwriter. The underwriter will summarize the information about your income, credit history, debt ratios, and savings to determine if your request for a mortgage should be approved. An underwriter will look to see if you have the income available to afford the mortgage payments, if you have a history of repaying your obligations, and if you have a few months of mortgage payments in savings in case of an emergency.
Once you’ve been approved for your mortgage request, you will receive a commitment letter from Sawyer Savings explaining the terms of your loan. A copy of your commitment letter will be provided to your attorney, who will guide you through the process of meeting the conditions for the closing. If the before-closing conditions have been satisfied, you will be contacted by your attorney to schedule your closing. Please be patient. The closing may happen quickly or may take several weeks depending on everyone’s schedule.
Contact Sawyer Savings to inform us that you have signed a Contract of Sale or binder. We may ask that you bring in or send the following information:
- Binder or Sales Contract.
- Verification of Income: last two years W-2’s, most recent pay stubs from the last month, past three years tax returns and YTD Profit and Loss statements (for self-employed individuals).
- Verification of Assets: last two months of bank statements (no need to bring Sawyer Savings statements – we can get those for you!).
- Verification of Liabilities: we’ll get most of this information from your credit report, but you should know who your creditors are and the monthly payments for each loan.
- Landlord’s name and address (if applicable).
- Signed divorce decree and/or separation agreement (if applicable).
- Copy of the Home Inspection Report (if applicable).
Please note that this list is meant as a way for you to prepare the documents you will eventually need to provide to us. The sooner we have this information, the quicker we can process your loan request.
Now would also be a good time to review your current and future banking needs. If you don’t already, you should consider opening a banking and checking account with Sawyer Savings to make the closing payments and future mortgage payments easier and seamless. You can review our financial offerings at www.sawyersavings.bank.
Once your attorney receives the contract of sale and inspection report, you will be contacted to discuss them. Your attorney should advise you if there is anything of concern in either the contract or the inspection report that needs further discussion with the seller and seller’s attorney. If any issues arise from the inspection you may need to put more concessions in place or reduce the purchase price.
One item that will need to be clear is how the excess home heating oil or propane, if applicable, will be handled at closing. Typically, the utility company will provide a statement of the oil/gas that is left in the house’s tank and you will be responsible for reimbursing the seller for that oil/gas at the closing.
After any changes/updates are made to the contract and both parties are satisfied, you will sign the Contract of Sale and be asked for a down payment. A down payment shows that you, as a buyer, are committed to purchasing the house. The down payment will be held in escrow, which means the money will go into a neutral bank account. At the closing, the down payment will be applied to the final cost for the mortgage. However, if the signed contract does to not go to closing due to the buyer’s fault, the seller may be able to keep the down payment in the escrow account.
So, signing a contract with a down payment is a serious decision that should not be taken lightly. Make sure you have completely discussed the contract with your attorney and understand all the possible ramifications of signing the contract.
It is HIGHLY recommended that you have a home inspection conducted by a licensed property inspector BEFORE signing the contract. The property inspector can perform additional tests that may be required such as water, septic, and radon tests. Feel free to contact Sawyer Savings, your realtor, or your attorney to ask for names of property inspectors.
The cost of an inspection is normally $500 or more. An inspection usually takes two to three hours which you should be present for. The inspector will often speak with you firsthand about their findings and you’ll have the opportunity to ask questions. The inspector will look at the exterior of the home including walls, foundation, grading, garage, and roof. They will also inspect the interior to include the plumbing, electrical, heating, air conditioning, water heater, appliances, fire safety, and bathrooms. A good inspector will also discuss and include in the report information about routine maintenance.
It should be noted that a home inspection is not a guarantee that the home will not have issues after the closing. A home inspection is for informational purposes:
- Overall condition of the house and surrounding property
- Overall condition of the home appliances
- Educating a potential home buyer about the home and how it operates (sewer vs. well water, electric vs. gas appliances, etc.)
- Potential issues or possible repairs
After your report is received, forward a copy to your attorney. Both you and your attorney should review the inspection report thoroughly and set up a time to discuss any potential issues. Finally, you paid for and own the inspection report and you are not obligated to provide the full report to the buyer, buyer’s attorney, or buyer’s realtor.
Now that you have an accepted offer, it is time to hire a real estate attorney to review and supply upcoming legal documents:
- Inspection report
- Legal documents associated with the property (potential tax liens, documented property lines, property title, etc.)
Along with your realtor, your attorney will be attending your home closing to ensure all documentation is correct and signed. Make sure your realtor and attorney have each other’s contact information because they will need to communicate with each other throughout the home buying process going forward. Poor communication at this point will delay the closing of the house.
To find an attorney, consider the following:
- A good attorney will have a good reputation and will be readily recommended by those in their field and those who have utilized their services.
- Online searches with positive reviews.
Just like hiring a real estate agent, make sure your attorney is a good fit for you. Their main focus is to make sure all the documentation is present and correct at the home closing and that the home closing is completed legal. Review all documents before signing and ask any questions you may have. A good attorney will take the time to discuss the documents in detail and ensure you understand and are comfortable with the home buying process.
After looking at various houses with your realtor, you finally find a house you would like to make an offer on! Your realtor will be an important ally in the offer/negotiation process. They know the surrounding real estate market and current real estate trends. They will remind you about key factors in making an offer:
- Current Interest and how likely/soon rates my change.
- School Taxes.
- Property Taxes.
- Comparable home values in the area.
- How aggressive the housing market is.
Your realtor will draft your offer letter which contains:
- Offer price.
- Are there repairs/work that has to be done to meet your expectations? You can make it a requirement that those issues are resolved by the time of closing.
- Detailed list of what is part of the offer, such as remaining appliances or furniture.
When the offer letter is completed, your realtor will be send it to the realtor of the homeowner for review. It may be accepted by the homeowner, but you should be prepared for:
- Your offer is rejected. At this point, work with your realtor to create your final and best offer. If after reviewing your best offer the homeowner refuses to negotiate or open a dialogue through their realtor, then it would be best to move on. If a dialogue is open for negotiation, lean on your realtor for advice and start the negotiation process.
- Competing bids. Other home buyers may be interested in the house you bid on. They may have better offers because of a higher offer price, less contingencies, or have more negotiation power with larger budgets. Again, if there is competition, it’s time to submit your final and best offer. If a competing bid is better than yours, then unfortunately the house hunt continues.
Remember, your realtor wants you to close the deal, so a motivated realtor will steer you in the right direction to find you a new home. And don’t get discouraged if your first offer isn’t accepted because there will other opportunities in the near future.
If your offer is accepted, you will be asked to put a down payment to hold the home as well as sign a binder showing your intent to purchase the home at the agreed upon price.
Once you have your Prequalification Certificate, it is time to interview potential realtors (real estate agents) and hire the one that fits your needs best. It is very important to have a good working relationship with a real estate agent to guide you throughout the buying process from looking at houses to the closing. They are going to help view homes that meet your current and future needs: style of house, geographical location, and the type of neighborhood (city, suburban, or rural). In addition, they will also discuss school and property taxes, benefits/potential issues with your homing needs, and the current trends of the real estate market.
Some questions to ask potential realtors are:
- Are you primarily a buyer’s agent or a listing agent? For home buyers, it is beneficial to work with a realtor that focuses more on home buyers than home listers.
- What neighborhoods/counties do you specialize in? An agent must be knowledgeable the type of area you wish to live. If you want to live in a rural area are they knowledgeable in testing well water and the history of area? Some rural areas may have been exposed to chemicals from farming or industrial industries.
- How long have you been a realtor? Experience matters in finding the perfect home for you.
- Do they work alone or are they part of real estate team? One benefit of working with team is in case your realtor is not available, they may be able to have someone on their team to show you homes in their absence.
- What is your preferred communication process (Text, email, phone, in-person)? A realtor who prefers phone calls may be irritating if you think a text or email can accomplish the same.
- What is your availability for viewing house and can they accommodate it?
Once you find the realtor is a right fit for you, you will be asked to sign a contract called an “exclusive buyer agency agreement.” This document outlines the realtors services and their compensation. You, as a home buyer, don’t pay for a realtors work because the home seller pays the commission for both the seller’s and buyer’s agents. The contract states the realtor will be your sole representative and that you won’t work with other real estate agents. Please read the agreement in full to understand what it is stating. For example, how long the agreement is enforceable and if you can terminate the agreement early.
When you have hired a real estate agent, you should give them the following:
- Prequalification Certificate, which conveys your budget.
- Area you’d like to live in:
- City, suburban, or rural
- School District
- Type of home you’d prefer (Ranch, Split Level, Colonial, etc.). This may change over time due to:
- The type of home you initially liked doesn’t meet your needs.
- A particular type of home is outside your budget or there is limited inventory.
The Realtor should show you as many homes as it takes to find the one to suit your needs and within your budget.
Once you’ve determined that you are ready to begin shopping for your home contact us, at 1-888-772-1871 or visit our online mortgage center at www.sawyersavings.bank, and we will help you determine your budget for purchasing a home. When creating a home purchasing budget, it is important to keep in mind the following:
- Down payment. The higher the down payment, the lower the monthly mortgage payment will be. And vice versa.
- Private Mortgage Insurance (PMI). Buyers are usually required to have PMI if the buyer doesn’t put a 20% down payment. Once a buyer has achieved 20% equity in a home, the cost PMI is no longer required. But until 20% equity is achieved, PMI is a cost outside of a mortgage payment. Ask us to explain PMI further and possible ways to avoid it.
- Interest Rate. The mortgage interest rate affects how much the monthly mortgage payment will be as well. The higher the interest rate, the higher the monthly payment. The interest rate may be affected by a buyers credit score, type of mortgage, and overall economic health of the country.
- School and property taxes are the responsibility of home owners and are based on the school district and area of where the house is located.
- Home Insurance. Home insurance is required for homeowners and is a common expense new homeowners overlook.
You can use our mortgage payment calculators to see how the above factors affect your future monthly mortgage payments.
To help us to determine how much you qualify for, you’ll need to provide the following income information:
- Recent paystubs
- W-2 statements
- Tax Returns
We’ll walk you through the prequalification process and requirements. If you qualify, you will receive a Prequalification Certificate!