Earlier this week I detailed the beginnings of the purchase process here in the Phoenix real estate market, particularly as it pertains to bank owned homes. So let’s say you’ve survived that part. What comes next?
Assuming nothing in the bank addendum changed the basic timelines set out in the Arizona Association of REALTORS Residential Real Estate Purchase Contract, here’s where you go from here (and if you used a cocktail napkin for your contract then you’re on your own.):
1) FINANCING. If you’re financing your purchase, you’ll have five days to formally apply for your loan. This also is the time when you need to get any and all additional documentation requested to the lender all so your mortgage officer can order the …
2) APPRAISAL. This one almost always comes out of pocket and payment’s due at the time of the appraisal. Costs vary but you’re looking at somewhere around $150. The appraisal is ordered by your lender in the name of your lender so if for some reason you decide to switch lenders midstream you’ll need to do this again. In short, the appraisal is an opinion of the home’s value. Your loan will be for the lesser of contract sales price or appraised value so if the house doesn’t appraise, you’ve got some decisions to make.
3) INSPECTIONS. You’ll have 10 days to complete all of your inspections and due diligence. This is the time to hire a professional home inspector to check the home. These inspectors are generalists so it’s possible (if unlikely) that you’ll need additional specialists to determine the state of certain systems. You’ll also want to get a termite inspection to see if which group your home falls into – those houses with termites and those that will get them someday. Welcome to Arizona.
4) TITLE REPORT. This is sent to you by the title company and shows you if there are any irregularities in the title. This is one of those items that never seems that crucial until something strange comes up. You’ve got five days to look it over and if you don’t like what you see you can cancel the contract.
5) REPAIRS. Repairs? On a bank owned? In some cases, if repairs are needed for a loan to be approved the seller/lender may be willing to do them. Before discovering the bank didn’t own the house, Fannie Mae had taken care of a water leak, some apparent mold and had shocked the swimming pool to a lovely shade of blue to meet FHA requirements. If you’re paying cash, by the way, you are more or less on your own … but cash still works better from a leverage standpoint.
6) CLOSING. Loan docs and deeds are supposed to be signed three days before the actual close of escrow date. This tends to be a moving target in as much as for those wanting to close early, you often can sign one day and fund the next. Docs need to be notarized. If you’re local, you can do this at the title company. If you’re out of state, you’ll need a notary. And if you’re in Canada, you’ll need an attorney since attorneys are the only notaries there.
7) FUNDING. Funds must be in cleared funds – either a wire, which is the most common, or a cashier’s check. Once you’re funded, the escrow company records the deed and you’re the owner of the home.
Granted this is a high-level overview; if you have specific questions, you know where to find me.
[tags]Phoenix real estate[/tags]