How to Close on a Home Without Going Crazy

Patriot Nation, we all know that buying a home can be one of the most exciting times of your life but also one of the most stressful. From the moment you start looking for homes all the way through the closing process, there are so many things that can go wrong. And if you don't know what to expect, you're going to be in for a world of anxiety. So, I'm going to take you through the entire closing process today and tell you exactly what to expect at every stage. That way, when you're going through it, you're going to be prepared, calm, and confident. So, as always, let's kick off this rodeo right now. Hi folks, I'm Kevin Fagan. I'm the mortgage patriot on your side nestled here in the Hill Country above San Antonio, Texas, serving all you proud Texans and all you great folks all around the country. Another great one today because we're going to talk about the closing process. And this is something that I think a lot of first-time home buyers are very anxious about because they don't know what to expect. And I've been through this process hundreds and hundreds of times. And I can tell you from personal experience that the more you know about what's going to happen during closing, the less stressful it's going to be. So, let's get into that content right now. So, let's start from the very beginning. You've got your pre-approval. You've been working with a real estate agent. You've found a home that you love. You've put an offer in. And now, you're under contract. So, what happens next? Well, first of all, congratulations. You're officially under contract. Now, the clock starts ticking. And there are several things that need to happen within a certain time frame. Let's talk about those. The first thing that's going to happen is you're going to deliver your earnest money check. That's typically about 1% of the purchase price. So, on a $300,000 home, you're going to write a check for about $3,000. And that check goes to the title company. Now, that money is held in escrow. It's not lost. If you back out during your option period, you get that money back. But if you close on the home, that money is applied to your down payment and closing costs. So, it's not gone. It's just held until closing. The next thing that's going to happen is you're going to schedule your home inspection. And this is one of the most important things you're going to do. You want to hire a licensed home inspector. They're going to come out and spend about three hours going through every single thing in your home. They're going to check the roof, the foundation, the electrical, the plumbing, the HVAC, everything. And they're going to give you a detailed report. Now, here's the thing. That report is going to be scary. It's going to have a lot of things in there that are going to make you want to back out of the deal. But don't panic. Every home has issues. Even brand-new homes have issues. The key is to identify which issues are safety issues that the lender is going to require be fixed and which issues are just cosmetic or minor maintenance items. So, that's where your agent comes in. Your agent is going to help you go through that report and figure out which items you need to negotiate for the seller to fix and which items you can live with. So, during your option period, which is usually 7 to 10 days, you're going to be negotiating with the seller based on what the inspection report shows. And that negotiation process is very important. You don't want to lose your earnest money because you didn't negotiate properly. Now, while all this is happening on the real estate side, you're also working on the loan side. And this is where it gets complicated because there are two parallel tracks happening at the same time. On the loan side, your loan officer and processor are going to be gathering documentation from you. They're going to need your pay stubs, your bank statements, your tax returns, your W2s. They're going to need all of that to move from a pre-approval to a full approval. And while that's happening, they're also going to be ordering your appraisal. The appraisal is going to cost you money upfront, usually about $500 to $700. And that's something you have to pay for out of pocket before closing. The appraiser is going to come out and look at the home and determine its value. And that's very important because the lender is going to lend based on the lesser of the purchase price or the appraisal value. So, if the appraisal comes in lower than what you agreed to pay, that's going to create a problem. And that's where the negotiation process comes back in again. So, let's say you've made it through the inspection period, you've negotiated any repairs, the appraisal has come in, and now you're just waiting for the underwriter to approve your loan. This is where patience really comes into play. The underwriter is going to go through all your documentation with a fine-tooth comb. They're going to verify your income, your assets, your credit. They're going to look at everything. And sometimes they're going to come back with more questions. And that's normal. Don't panic when they ask for more documentation. Just provide it as quickly as you can because the clock is still ticking. Eventually, you're going to get what's called a clear to close. And that's the moment you've been waiting for. That means everything is done. The loan is approved. The title company has all the documents ready. And now you're going to schedule your closing. Closing day is usually at the title company. You're going to sit down, sign a whole bunch of papers. They're going to walk you through everything. And then, the keys are yours. That's the moment. That's the moment you've been waiting for. So, my advice to you is this. Be prepared. Know what to expect. Have a good agent and a good loan officer on your side. And everything is going to work out just fine. I'm the mortgage patriot, Kevin Fagan, on your side. Make it a great one. END OF TRANSCRIPT