You’ve found the house. You’re under contract. Congratulations! Think the hard work is done? Think again. Before the home is legally yours, you gotta get to closing. Think of it as a journey and this video outlines the seven steps to get you there on time. Since North Carolina is a buyer beware state, skipping a single step could lead to some serious problems and financial loss for you, the buyer. My name is Denis Raczkowski, the baker/broker behind Emerald Isle Vacation Home Specialist. The first step is to Hire an Attorney. In North Carolina, lawyers, not title insurance companies, are the settlement agents. It is your attorney who will search public records and certify the home’s title before the title company creates an insurance policy for it. Your attorney also will title the deed as you specify and will record the new deed in the county records. Of course, you, the buyer, will pay for these services so choose an attorney wisely.
A 2nd step is the Home Appraisal. Your Lender will want to know that the property is worth what you’ve agreed to pay, so your lender will order an appraisal. An appraisal is an unbiased and independent professional estimate of your property’s current market value determined by an unvested third party. The appraiser gets paid for his/her services regardless of whether the loan goes through. Be prepared to pay this cost in advance. The appraisal report is issued to the lender, and a copy will be sent to you. The seller receives a copy only if the valuation is below the contract sales price.
A 3rd step is the Home Inspection. Though not everyone gets a home inspection, I highly recommend them to all my buyers. A general home inspector will check the property’s integrity — from the foundation and plumbing to the electrical wiring, roofing and rainwater management, as well as heating and central air conditioning, attic, insulation and water heater. Other specialists will conduct independent termite and septic inspections. Detailed reports will be issued by the inspectors for your review. The cost of each inspection is paid directly by you as the buyer to the inspector. However, inspections not only give you peace of mind and protect you against potential structural problems that could cost thousands — if not tens of thousands — of dollars to repair, but the home inspection also gives you leverage when asking the seller to fix problems or potentially subtract the cost of these repairs from your purchase price. Sellers generally agree to some repairs or price reductions but usually not all at which point you as the buyer must decide whether to proceed with the purchase or not. This is called the due diligence process.
A 4th step is Homeowner’s Insurance. Homeowner’s insurance is another buyer’s responsibility when purchasing a new house. Homeowners insurance fees vary widely in North Carolina depending on overall location and proximity to the ocean. Despite the costs, homeowner’s insurance is an absolute necessity. Homeowners insurance protects against damage to your home and belongings from covered perils, and safeguards your assets if you're liable for someone else's injuries or property damage. And, it’s also required if you’re paying for your home with a mortgage. And, if you do purchase on or near the coast, you may be required by your lender or your peace of mind to purchase flood insurance and be forewarned, binding flood coverage requires a year of payment upfront.
A 5th step is the Walk through. Properties are supposed to transfer “broom clean” and this includes attics + garages + storage sheds. You as the buyers have the right to request that all items (apart from fixtures) be removed.
A 6th step is Escrow accounts. There are a number of different types of escrow accounts you, as the buyer, need to decide on. The most common escrow account is set up by lenders to collect yearly tax and homeowner’s insurance payments. This allows you to make monthly payments that the lender pays out at the end of every year. Many homeowners find it easier to pay into an escrow account monthly over making larger payments once a year.
A 7th step is Bringing the Down payment. The final closing disclosure or CD prepared by your attorney will confirm the amount of funds you need to bring to settlement. If you are wiring funds, please send the money to your attorney’s escrow account at least 24 hours prior to settlement. If you are paying via check, please have your bank issue a certified check made payable to your attorney. A personal check will not be acceptable, as the funds need to be immediately available for your attorney to effect the closing.
Clearly, you have to be a DO bee If you want to get to closing. But, there is also one DON’T. Don’t apply for any credit cards, additional loans, or make a major purchase. Your credit report will be scrutinized from the time you go under contract until the time you close. Adding debt or a loan to your existing situation could disqualify you from acquiring financing.
Last step – after your attorney gives you the keys to your new home, treat yourself! Buying a house is a “big deal” and there is a lot of work involved, even after you go under contract. Take time to relax and celebrate a journey well executed.
Comments