You Have A Home Under Contract, Now What?

Wow, what an exciting day, your Realtor called and informed you that the Seller has accepted your last offer, and the negotiations are over.  You now have an executed contract, now what do you do?

After interviewing, and selecting, a Loan Officer, you met with him/her and received a pre-approved for a home purchase.  You met with a Realtor, and signed that Realtor up as your Buyer’s Agent.  Your Buyer’s Agent made notes related to what you wanted in your new home, and after reviewing a selection of homes, you found the home you wanted.  You made a written offer on the home, the Sellers countered your offer, and you countered with a revised offer; and the revised offer was accepted.

You, or your Realtor, will provide to your Loan Officer a copy of the executed contract with all addendums.  Because you were pre-approved before you started shopping for a home, a major cause of stress has been removed from the process.  It is a matter of following certain procedures, and closing on your new home.

What are you to do?  The first thing to remember is not to do anything that will change your employment, income or asset status.  If you are not sure if something you want to do, and have to do, will jeopardize your approval, call your Loan Officer, and have him/her to advise you.  Your Loan Officer will need current or updated of the following:

Most recent paystubs

Banking statements

Retirement or 401k statement

Your pre-approval was based on you and a hypnotically home purchase, now that you have a contract, the home purchase is real.  You will have to meet with the Loan Officer to complete paperwork related to the new property.  The good news is that you should not have to sign all of the disclosure forms over again, only the ones related to an actual property.  Your Loan Officer should only have to update your data and pass your file to the Processor.

The Processor has to task of verifying all of the information you provided to your Loan Officer.  He/she will make sure the data related to your income, assets, and employment is documented, verified, and validated.  The processor will also order third-party services, such as appraisal, title work, and verification of your homeowner’s insurance, etc.  Once all information in the file has been checked, the Processor will organize the papers in your file in a “stacking order.”  The stacking order is the order in which the Underwriter will want to review your information.  After stacking the file, it will be given to the Underwriter to “Underwrite” the file.

The final approval of your loan will come from the Underwriter, the person whom is making the final decision.  The Underwriter is charged with the duty of making sure that you, the home, and the loan all comply with program guidelines, company risk levels, and Government compliance regulations.  The pre-approval was a cursory look at you employment, income, credit and assets.  All of the data has to be verified and validated, to make sure everything is as it appears.  In an ideal situation, if the Loan Officer and Processors were very thorough, the Underwriter is simply a validator.

Many times, you have a two-step approval from the Underwriter.  The first approval is called a “Conditional Approval.”  Your file may have been given to the Underwriter before all of the third party services were not finished, such as the appraisal or title work.  Instead of holding up the file for these items, the Processor would send it on to the Underwriter.  At which time the Underwriter approve the file, under the condition that the missing data items will clear.  Thus, the “Conditional Approval.”  The process of sending the requested items to the Underwriter is called, “Clearing Conditions.”

The final approval is called the “Clear To Close.”  This is the approval everyone is waiting for, because it means all conditions have been met, and all Underwriting questions, or concerns, have been answered.  This approval allows your file to be moved to the next department, which is the “Closing Department.”  The Closing Department is were the final documents are prepared for your closing, and sent to the Closing Agent.  In different parts of the country, Closing Agents may be Closing Attorneys, Title Companies, or Escrow Companies.  Your Realtor and Loan officer will let you know for your area.

Your type of closing, Traditional or Escrow, will be determined by what occurs in your area.  According to Q&A listed on Answers.com-WIKIANSWERS, to the question, “What is an escrow state?”

 Answer

“There are two main types of real estate closings for purchases of residential properties.  One is the traditional closing and the other is an escrow closing.  In traditional closing states, like Georgia for example, the buyer and seller and any other interested parties come to the closing table at the appointed time for the transaction, sign all necessary documents and the transaction is completed.  The property title changes hands and the money (lender’s or buyer’s) changes hands as well.  In traditional closing states on a purchase there is one closing and fundsdisbursement which finalizes the transaction which is generally referred to only as "the closing". 

In an escrow state, like California for example, all of the stipulations for the transfer of the property and funds are cleared prior to the day of closing.  Important documents and funds are held "in escrow" by the assigned escrow agent until the time of the closing.  If all stipulations have been met according to the escrow instructions (created between seller, buyer and lender) the closing is final, all funds are disbursed and the sale is final.  The closing is generally referred to as an "closing of escrow".”

Now the most exciting thing of all, you get the keys to your new home.  You are now a proud homeowner, and are entitled to all of the rights and privilege of homeownership.  The first step to financial empowerment is homeownership, because the laws of this country were made by and for property owners.