Saturday, August 22, 2009

How to buy a house in 25 easy steps - Part IV

You have a binding agreement, you've done your inspections and either re-negotiated the contract or decided to live with the house, warts and all. What's next on the agenda?

16. Pay for your appraisal. Your lender or another third party will order an appraisal from a licensed appraiser. Both the appraisal and the home inspection will usually need to be paid for up-front by you. The appraisal is a double check for your lender. They don't want to lend more money on a house than the house is worth. The appraiser comes in and puts in his two cents about whether or not s/he thinks the house looks good enough for the money you (or actually the bank) is putting into it. In some places, you'll also have a survey done, again, something you would pay for up front. In practice, this is not required and is rarely done in Chattanooga unless there is some type of property line dispute.

17. Honestly, there isn't much for you to do at this point. You'll need to start shopping for home owner's insurance - also called hazard insurance. Check with the company that has your auto and/or renter's insurance, you can often get discounts for having several policies together. Once you have decided on a policy, submit the agent's contact info to your lender. At least around here, you won't pay for the policy yourself right now.

18. Pick out a title company. These are the people who will handle the actual closing paperwork. They will also check out the title to the property and make sure there are no liens or back taxes owed. The title company will also provide a title insurance policy which protects the mortgage holder in the event that a previously unknown lien comes to light later on. For many foreclosures, the choice of title company may be somewhat out of your hands. Most will have already had the preliminary title work done and paid for by the seller. There isn't usually a good reason to have it done again so you might as well use what someone else has already paid for.

19. Start putting all that new furniture you're going to need on your credit card Avoid making any large purchases during this time. You have a pre-approval but right now your loan is going through the underwriting process which means that all of your financial actions are being scrutinized by either a computer or a human number cruncher. Either way, you are going to want to look like a good credit risk.

20. Check in with your Realtor and lender every 3-5 days just to make sure everything is on track. You'll have anywhere from 2-6 weeks of dead time between your contingency removals and closing. You don't want to get within a couple of days of your contract closing deadline only to find out that someone has been waiting for 3 weeks to hear back from you on something that can't be taken care of in time. Say things like "Just wanted to make sure the title work has been ordered" or "Have we heard back from underwriting yet?" Makes you sounds like a person who is really on top of things and who will not be trifled with.

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