WHAT TO EXPECT IN A RESIDENTIAL TRANSACTION
Not every escrow is exactly alike or goes according to plan...but for the most part, they all tend to follow the same general path. The following gives you a pretty good idea of how the whole thing works and what you can expect during your realt estate loan process...enjoy!
First Meeting
Typically you meet with the Realtor first, either thru referral, advertising or open house.
You discuss your needs/wants in property with the Realtor to clarify what you are looking for.
Get pre-approved with a Lender
Next it’s time to meet with your lender to discuss desired loan program, payment, rate, etc.
Your lender will need to review your complete documentation needed to ensure qualification. It is vital to provide the needed documentation upfront and in a timely manner.
This is the time to fix or address any issues or potential loan approval challenges identified. It’s best to do it now to avoid any challenges closing escrow down the road.
Once your lender is done with this piece, you get your Lenders Winning Offer Packet and it’s time to go shopping for a home. Happy House Hunting!!
Start Home Shopping
This is the part where you compare and contrast the different neighborhoods and home style that fit your needs list. Check out our “Selecting the right home” or our “Picking the right Neighborhood” pages for helpful tips
Discuss and review your potential offer with agent. Don’t be afraid to push the limits a little bit here, but be sure to heed your agent’s advice. After all, this is the area in which they shine in terms of knowing the local market climate and level of action.
Once you are satisfied with the overall offer, it’s your agent time to present the offer to seller along with your lenders Winning Offer Package.
Present and Negotiate Offer
At this point, the seller can either accept your offer, counter your offer, or reject your offer.
Depending on the outcome, you may find yourself going back to the drawing board and resubmit your offer to meet the seller’s demands. Or you may decide to move on to a different property.
Open Escrow
If your offer does get accepted, your next move is to send a good faith deposit known as an EMD or "earnest money deposit" to the escrow company. This serves to show the seller you are serious about moving forward and are committed to buying their home.
You are now officially on the clock, so it’s important to move quickly and efficiently thru the next steps in order to meet contractual obligations.
Submit Loan Application
Once we, the lenders, get word of an accepted offer, it is our responsibility to request escrow & titles fees so we can get the file disclosed to you for both electronic and wet ink signatures. These are time sensitive and must be signed within 72 hours, but don’t worry, we will walk you thru this part when the time comes.
We may ask you to provide updated paystubs and bank statements if it’s been a while since you were pre-approved. We are picky like that.
It’s generally a good idea to start shopping around for your homeowner’s policy at this point so you have time to select the best fit for you.
Loan Submission
Once we have the signed disclosures back, your loan is turned in for loan processing. During this time, our team orders all the required verifications, (Employment, income, credit, property, rental history, etc.) and prepares the file for formal underwriting. This typically takes anywhere from 3-5 business days. The appraisal is also ordered at this time.
Once all the verifications are in, the file is transferred and placed in line for formal underwriting approval
Contingency Period
The contingency period is talking about the 10-17 days typically allowed for you to get your home inspections, home appraisals ordered and loan approvals to be issued. (This is what we were referring to earlier in saying that we are officially on the clock.)
Even though it’s not required, it’s a good idea to spend a few hundred bucks getting the home inspected by a certified home inspector. This is not to be confused with the appraisal, whose main purpose it to tell us the lender what the home is worth. A home inspection can go a long way in helping you find property issues that lie below the surface and invisible to the naked eye.
Loan Approval
The underwriter’s job is to review the file in accordance to the program guidelines. They compare our income calculations with the income reported by the IRS and your employers, review the credit profile, reserves and property appraisal to make sure the loan is good to go.
Once done reviewing, they will issue a formal underwritten conditional approval along with a needs list requiring any additional documentation to support the file. Ideally, this is a short list, assuming we have done a thorough job in collecting documentation in the beginning. This needed items list is known as PTD (Prior to Loan Doc) “stips”.
Your loan may now be locked since the conditional approval is issued. Note: You will receive a Loan Estimate confirming your rate once it is locked that must be signed and returned acknowledging your rate. This will be followed by a closing disclosure that acknowledge any credits being given.
Clear to Close
Your lender will reach out to you and let you know if you need to provide any additional paperwork to get Cleared to Close (CTC’d).
After we have finished collecting your PTD stips, they are turned in to underwriting for final review and Clear to Close status.
Assuming all PTD stips are satisfactory, your loan is moved forward to the doc drawing and funding department. Hang in there, we are getting close!
Sign Documents
Our doc drawing department prepare your loan docs and sends them over to escrow for signing. Escrow prepares their own part of the loan docs and gets them ready for you to sign.
Escrow contacts the Notary and coordinates the loan doc signing time and location with you.
Loan docs are signed and returned to escrow with the notary.
Funds to Close
Your loan docs should have a copy of the wiring instructions needed for you to send in the remaining funds needed to close. Most escrow companies have started to move away from accepting checks, either cashiers or personal. It’s advisable to be prepared to make a trip to the bank after signing loan docs and you are given the final figure for funds to close.
Closing the Escrow
Escrow is responsible for returning the signed loan docs to the lender and the Grant Deed to the title company.
Our funders review your loan docs and send the balance of purchase price to Title to finalize your loan process
Escrow and title work together to ensure your Deed is recorded with County Recorder's office. Escrow confirms you have recorded with the county and issues you any refund checks for any funds that you may have overpaid.
That’s it…time to pop the corks…high fives all around…get your keys and move in!