Unpacking the Mortgage Process: Home Inspections, Appraisals, & Closing
Home inspections, appraisals, and closings, oh my! Aspects of the homebuying process can seem frightening, so knowing what to expect can prepare you for what’s ahead. Here’s a breakdown of three vital parts of the process.
- This is the last opportunity to check for defects within the house prior to committing to the purchase.
- Usually takes place 7-10 days within initial offer.
- The home inspector is typically hired and paid by the buyer.
- The home inspection takes approximately 2-4 hours to complete.
- The inspector will look at plumbing, electricity, and overall foundation of the home.
- The inspector will send the buyer an inspection report with their findings; this includes pictures, analysis, and recommendations.
- Home inspections are not required (unless required by a specific down payment program); however, they provide the buyer with important opportunities to minimize unpleasant surprises and difficulties.
- Depending on the inspection report, buyers can use it for negotiation on features that need repair or replacement.
- An appraisal is an evaluation of the property by a third party.
- Buyers usually cover the cost of the appraisal.
- Lender orders appraisal prior to closing to ensure home is worth at least as much as what the buyer is committing to paying; buyers are not permitted to select their own appraisal company.
- The appraiser will compare recent sales of similar properties, market trends, and conduct an in-person inspection of the home; this is different than the home inspection.
- If the appraised value matches or is higher than the contract price, the transaction can continue as planned.
- Some sellers will lower the listing price to match the appraisal; other sellers may disagree with the appraisal and refuse to negotiate.
- If a seller refuses to negotiate, the buyer can either make up the difference or request another appraisal; it’s up to the lender to approve the second appraisal; if denied, the buyer can walk away from the deal.
- The appraisal process can take days to weeks to complete; if the buyer or seller requests a second appraisal it will take longer.
- The appraisal is important because it allows both the lender and buyers to feel comfortable with the investment.
- The closing process finalizes the home purchase.
- During closing buyers sign several legal documents and pay any additional fees; some fees are recurring costs like property tax; others are one-time closing cost expenses that can include:
- Loan origination fees
- Application fee
- Mortgage broker fee
- Title insurance
- Appraisal fees
- Title search fee
- Other miscellaneous payments
- Our ReadyClose process allows you to sign the majority of your closing documents from home, saving you time in the process!
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