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signing loan papersThis is the next post in my series providing information to first time home buyers in the Dayton, Ohio area, for what they can expect from the end to end home buying process. My previous post provided guidance for home buyers who are unsure of what offer to make on a home. In this post, I will explain what buyers can expect from the period of time after an offer has been accepted to when the closing occurs. If you require assistance then contact me today to speak with a real estate agent.

Dayton home buyers should be prepared to turn over all financial documentation to their loan officer

After an offer has been accepted on a home, the buyer and seller will generally have to wait anywhere from 45 to 60 days to close, or to transfer ownership, on the new home. The reason for the time period being so long is often to account for the underwriting process for the buyer’s home loan. The underwriting process is essentially a deep dive into the buyer’s finances; underwriting will examine the buyer’s income sources, job security, assets, and verify that all information the buyer has provided is true. This process can be longer or shorter depending on the complexities of the buyer’s finances. If a buyer has had the same employer for many years, only has one income stream, has few debts, and sizable savings, underwriting may go quickly. If the buyer owns his or her  own business, works on commission, or has several revenue streams, the underwriting process may be lengthier.

Dayton home buyers should be prepared to turn over all documentation their loan officer asks for as quickly as possible. This might include tax returns, W2 forms, pay stubs, bank statements, etc. If you have recently made a large purchase, your loan officer may ask for a letter of explanation regarding spending that stands out. Lifewise, if you were the beneficiary of a windfall, or a large deposit was made into your account, you may be asked to explain where the money came from. The underwriting process can feel invasive and frustrating. The more organized a buyer can be with their financial information, and the faster they can get the requested documents to their loan officer, the more streamlined the process will be.

It is of the utmost importance that buyers do not make any large financial purchases, or any major life changes, before they close on the home they wish to buy. This means they absolutely should not buy a new car, quit their job, get married, separate from their spouse, or spend any significantly large amounts of money that is outside of their usual spending habits. Your loan officer will re-verify your information immediately before closing; if any large changes to your credit occur, it is found out that you were not truthful on your loan application, or changes to your income have occurred, your loan will be denied at the last minute.

Dayton buyers have many responsibilities that are time sensitive prior to a deal closing

While the buyer’s loan is being processed, the buyer has other responsibilities that they must address in a timely fashion. Following the acceptance of an offer, the buyer will have a limited amount of time – generally 10-14 days – to inspect the property. This means that the buyer may hire experts to more thoroughly inspect the home for problems and defects. Issues that whole home inspections look for include issues with the foundation, issues with the roof, they will check to make sure that the water and electricity is working, that the HVAC system works appropriately, etc. If red flags turn up on the whole house inspection, your inspector may recommend a further electrical, plumbing, or structural engineering inspection. Other types of inspections buyers often consider ordering are termite inspections, and in a limited number of cases, radon or lead based paint inspections. All inspections must happen within the amount of time listed on the contract – if the buyer does not get the house inspected within that period of time they forfeit their right.

The inspection period is extremely important because it provides the buyer with information regarding their home purchase. If the inspection turns up issues that concern the buyer, they may either request that the seller fix the issue of concern, or ask for a reduction in the price so that the buyer may fix it themselves. Certain types of loans – such as FHA and VA loans – have strict loan standards and may require that a seller fix certain issues before the loan is approved. In rare cases, if the home inspection turns up an issue that the buyer is truly uncomfortable with, they may choose to walk away from the deal altogether.

Separate from the home inspection, is the home appraisal. The home appraisal is a requirement of most lenders, and it is a report that assures the lender that the home being purchased is actually worth the price the buyer has offered to pay. The home appraisal must also be completed before the loan is signed off on. If your real estate agent has helped you make a fair bid on the home, the appraisal should come back with no problems. In rare cases, the home appraisal report may value the house at less than what the buyer has offered to purchase. In this case, the buyer may either ask the seller to agree to sell the home at the appraised value, or the buyer may choose to make up the difference. The seller also has the option to refuse to take a lower price, and walk away from the deal. However, the lender will not loan an amount of money that is higher than the appraised value of the home in question.

The final thing a home buyer must do before they are ready to close on a home is obtain homeowners insurance. Many insurance companies offer bundle deals for individuals who have their car and home insurance with the same company. There are also insurance brokers whose job it is to find the best deal available for the homeowner. If a buyer does not know who to call, your real estate agent may be able to put you in touch with an insurance broker who can be of assistance. One you have selected your insurance company, they will need to be put in touch with your lender. Once you begin your mortgage payments, your lender will be responsible for directly paying your insurance and property taxes. The account that the buyer pays into, from which the lender uses to pay insurance and taxes is called an escrow account.

The period between making an offer and getting the keys to your Dayton area dream home can be long, anxiety filled, and stressful. The buyer has many responsibilities that are time sensitive, and it is possible for deals to fall through. Your real estate agent is meant to help you through the process, address your concerns, and keep you on schedule so everything happens within the allotted time period. By listening to their guidance and staying on top of what you need to do, you will make it to a successful closing.

Contact me today to speak with a realtor. I also service Beavercreek, Centerville, Clayton, Englewood, Oakwood, Fairborn, Harrison Township, Huber Heights, Kettering, Miami Township, Miamisburg, Riverside, Springboro, Trotwood, Vandalia, Washington Township, West Carrollton, and Xenia.