Final Approval: The Calm Before the Closing Storm
You’ve done it! You’ve navigated through the tricky option period, and now, you’re in the home stretch. The buying process can feel like a game of “hurry up and wait,” and now is the time for a little more waiting. But don’t worry – there are still things you can be doing to keep everything on track and make sure your journey to homeownership goes smoothly.
1. Get Your Homeowners Insurance Quote
During this waiting period, one of your first responsibilities is to secure a homeowners insurance quote. If you already have car or renter’s insurance, check with the same provider for a potential discount. Your realtor should be able to recommend a trusted insurance agent as well. To get your quote, you’ll need some details about the house, like the age of the roof and the type of siding, which your realtor can easily provide. Once you have your quote, send it to your lender so they can include the insurance premium in your final payment calculation.
2. Decide on a Home Warranty
While homeowners insurance is required by your lender, a home warranty is optional but worth considering. A home warranty covers smaller systems in your house like the air conditioner, water heater, and plumbing. If something goes wrong with these systems, the warranty company will send someone out, though you’ll usually pay a small trip fee. Homeowners insurance, on the other hand, covers major disasters like fire or hail damage. While a warranty isn’t mandatory, it can offer peace of mind for the everyday, unexpected home repairs.
3. Stay on Top of Your Emails
Your lender and the title company are working hard behind the scenes to prepare everything for your closing. To keep things moving smoothly, it’s essential to respond promptly to any requests or questions they may have. Being an active, communicative buyer helps ensure that the entire process stays on track.
What’s the Role of the Title Company?
The title company plays a crucial role in ensuring that the property you’re buying is “clean,” meaning there are no outstanding debts, liens, or unresolved legal issues associated with it. To further protect you, they provide title insurance in case something unexpected arises after the transaction. In addition to these checks, the title company acts as a middleman, working with both you and the seller to compile all necessary documents and prepare for closing. They also hold and transfer the funds when the deal is complete.
The Final Approval Process
Even though you’ve already received pre-approval, your lender will begin working on your final approval once the option period is over. This part of the process is mostly behind the scenes, but your lender will need to order an appraisal, which can take about a week. There are three possible outcomes from the appraisal:
1. Above the Contract Price – If the appraisal comes back higher than your purchase price, congratulations! This means you’re buying the house for less than it’s worth, which means built-in equity.
2. At the Contract Price – If the appraisal matches the purchase price, no worries! You’re getting the house for what it’s valued at.
3. Below the Contract Price – This can cause some issues since your lender won’t approve a loan for more than the appraised value. If this happens, your realtor will work with the seller to negotiate a price drop or, if you’re able, you can cover the difference in cash.
Most appraisals come in at or above the contract price, so this step shouldn’t be a major cause for concern.
Recap: You’re Almost There!
Right now, your lender and the title company are hard at work to get you to the closing table. You’re doing your part by gathering documents and staying in touch, while your realtor is managing the process to keep everything running smoothly. Your home buying team is working together, and the finish line is so close!
You’ve almost made it! In the next blog, we’ll walk you through the final steps to homeownership, including the final walkthrough and closing details. Stay tuned!
