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You finally found the home of your dreams, and you have a ratified Contract! Congratulations! From now until settlement there are several items that you and your Realtor will need to stay on top of.
Loan Approval
The Contract requires that, as the Buyer, you are able to remove the financing contingency and the appraisal contingency of the Contract within a specified number of days from the Date of Ratification. To ensure you meet these dates, please work closely with your lender!
According to the terms of the Contract, you are required to make a loan application within 7 days of the ratification date. Your lender will ask for a lot of documentation including 1 month of paystubs, 2 months of bank statements, the last 2 years of W2’s or K-1’s, the last 2 years of tax returns, a copy of your driver’s license, and any other items that the underwriter might require. Sometimes the process can seem onerous but be patient and provide the lender with everything they ask for as soon as possible.
The lender will order the appraisal which can take up to 2 weeks to come back. You will receive a disclosure package that contains many legal documents for you to sign. Again, please make sure you sign and return the package as soon as possible so the loan process can stay on track.
Condo/Home Owner’s Association Resale Documents Contingency
If the home you are purchasing has a Home Owner’s Association (HOA) and/or a Condo Association, the Seller is required to provide you with Resale Documents which disclose useful information about the Association such as the governing rules and operating budget. The Association will also perform an inspection of the property to ensure that it conforms to the architectural code of the Association. Any deficiencies will be noted in the Resale Documents, and in most cases, the Seller is obligated to correct the deficiencies. You are entitled to a 3 day review/rescission period. If, during your review, you become aware of anything that changes your mind about purchasing this home, you can void the Contract within that 3 day period and receive your earnest money deposit back with no further obligations to the Contract.
Home Inspection Contingency
If you have made this Contract contingent on a Home Inspection, you’ll be responsible for paying and scheduling a home inspector within the time frame specified in the Contract. Your Realtor can provide a list of home inspectors, or you can find one with an online search. If, as a result of the inspection, there are items you would like to have repaired and/or replaced, your Realtor will write the items up in an Addendum and submitted to the Seller’s Agent. The Seller will have 2-3 days to decide which items they will address. If they decide to counter the Addendum in any way, you have 2-3 days to decide if you wish to accept the Addendum as countered, counter the Seller’s counter, or void the Contract and receive your earnest money deposit back with no further obligations to the Contract.
Radon or Lead Paint Contingency
If you have made this Contract contingent on a Radon Test and/or a Lead-Based Paint Inspection, you should also schedule these tests to take place within the time frame specified in the Contract. Again, your Realtor can make recommendations or you can find companies that perform such tests with an online search. The test results should be deemed acceptable according to EPA mandated levels. If the results are higher than mandated levels, the Seller has the option to remediate. If the Seller elects not to remediate, then you as the Buyer have the option to decide whether or not to proceed with the home purchase.
Termite Inspection
In most cases, your Lender will require a termite inspection that is current within 30 days of Settlement indicating that the home is free and clear of wood destroying insects. The Contract specifies whether it is the Seller’s or the Buyer’s responsibility to order this inspection. If wood destroying insects are found, the Seller is responsible for their extermination and any structural repairs that might be necessary.
Home Owner’s Insurance
Your lender will require you to obtain a Home Owner’s Insurance Policy that covers the replacement cost of the house with the insurance company of your choice. It is also a good idea to insure the contents of your house as well at this time.
Utilities
Please have all appropriate utilities put into your name beginning the day of Settlement.
Pre-Settlement Walk-through
You will do a final walk-through of your new home. This walk-through usually occurs the day of Settlement. There are three main purposes for this walk-through: 1) to confirm that repairs agreed to from the Home Inspection have been completed; 2) to confirm that all the appliances, electrical systems, plumbing, and heating/air conditioning systems are functioning as they were at the time of the home inspection; 3) to confirm that the home has not been damaged since the time the Contract was written.
Will you be there?
Please plan ahead! Will each person named on the Contract be at Settlement to sign documents? If not, please tell your lender and the Settlement Attorney as soon as possible so there is time time to prepare and approve a “Power of Attorney” for your substitute.
Settlement
Please make sure you bring a picture ID such as a valid driver’s license or passport. If your lender has not given you the estimated amount that you will need for Settlement, your Realtor can give you an estimate. The check should be in the form of a “certified check” or “cashier’s check” made payable to the Settlement company. Any small balance still owed on your part can be handled with a personal check, and any overage will be reimbursed to you at Settlement.
You are now the proud owner of your new home! Congratulations!
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