Your Journey Home ---- the last few items

All’s been approved, repairs have been done and the appraisal has been completed and sent off to the loan underwriter by your lender for final approval.   All that’s left to do is to pack …. You hope.

In your haste to pack … do not pack any important financial documents.  TRUST ME, the lender will be calling and asking for some document that you know you have already provided.  But even more important than that is under no circumstances should you incur any new debt.  While it may seem like a good idea to go out and buy that new refrigerator so it can be delivered the day you move in, it isn’t.  I promise you the lender will pull your credit report 24hrs prior to closing and any new expenses can and will derail the closing.  My advice to buyers – especially to a first time buyer is if you cannot pay for an item in cash … don’t purchase it, wait till after closing and funding.

One other thing that you will need to do just before closing is your final walk-thru.   What is the final walk-through? It's your last chance to identify any problems before you move in. The walk-through generally takes place 1-2 days before the closing – once the seller has moved their belongings out of the house, if possible.  Here's a checklist of items to look over on your final walk-through:

-Check to make sure that all agreed to repairs have been completed and that you have copies of any receipts for those repairs.

- Electrical fixtures. Turn switches on and off to make sure everything is functioning properly.

- Plumbing. All the faucets in the kitchen, bathroom, and the exterior of the house should be turned on to make sure they are connected and there is decent water pressure. Flush the toilets to make sure they are draining properly.

- Exhaust. Test fans in the kitchen, bathrooms, and laundry room to make sure they are functional.

- Windows and doors. Do they close properly? Are they latching correctly? Do all of the locks work?

- Appliances. Run a check of the stove, oven, dishwasher, garbage disposal, trash compactor, refrigerator and freezer, washer and dryer, and any other appliances that the previous owner left behind.

- Environmental controls. Are the heating and air conditioning working properly? Check the furnace and make sure the water heater is providing adequately hot water.

- Safety. Are the smoke detectors and carbon monoxide detectors plugged in or are their batteries charged?

- Damage. Is there any evidence of disrepair, including leaks and water damage, that wasn't noted in your inspection report? Be especially vigilant to make sure that floors, walls, and door frames haven't been damaged during the removal of furnishings. Examine both the interior and exterior of the home for anything that needs to be repaired.

Make sure you haven't been left with any trash or belongings that the previous owner neglected to remove. Verify the presence of all items (appliances, window treatments, etc.) that were supposed to be part of the transaction.

- Keys. Make certain you have keys to all doors, outbuildings, and mailboxes as well as the garage door opener.

- Documents. Ask that the seller leave behind manuals for any household systems or appliances that will remain with the house. If there are home blueprints, records of modifications or renovations to the house, or other information that would be useful to have when you move in, make sure that you ask for them.

If the previous owner has been diligent, the home should be clean and you should be able to move right in with a minimum of extra work.

You will need to make sure that you have switched out utilities and have service turned on in your name – especially critical utilities such as gas, electricity & water – you don’t want those services turned totally off.  If they get turned off, it will most likely result in a reconnection fee which could be more costly than a name change on a bill – and let’s not forget that in cold temperature climates, turning off the heat  (be it gas or electric) can result in frozen pipes and broken water lines ….

It’s best to try and schedule your closing in the morning – that way funding can most likely occur in the early afternoon and you can get the keys to your new home and move in.  This is especially critical with new construction. Most builders will not turn over the keys to a property until they have their funds in the bank.  Sometimes the seller will have negotiated that they have a day after the closing to move out if this is agreeable to you that’s OK – but remember if that is the case you may not be able to do an empty home final walk-thru. 

BUT YOU HAVE MADE IT!!! You are now HOME!   All you need to do now is move in your boxes, decide where to place your belongings.

Your Journey Home – almost there!

You're almost to the finish line. You've found the home of your dreams, secured financing, and your offer has been accepted. You've been thru inspections and negotiated any repairs with the home owner. Now all’s that left to do is pack and wait till the day of closing.

The next few weeks should be pretty quiet, but there will be several things going on.

Quickly, after inspections have been done and all repairs items negotiated, the bank will order an appraisal.  An appraisal is an independent look at the property that the bank orders to determine the value of the property in relationship to the neighborhood. Your lender will require an appraisal as security for your loan.  Don't confuse an appraisal with a comparative market analysis, or CMA.  Your  real estate agent probably used some version of a  CMA when you were first considering making an offer on the property.   Realtors use CMA’s to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraisal price with their CMAS, but an appraiser's report is much more detailed--and is the only valuation report a bank will consider when deciding whether or not to lend the money.  There are several ways that an appraiser will look at your new home.

Sales Comparison Approach

The appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area (within about a 1 mile radius). The properties used are called comparables, or comps.  Since no two properties are exactly alike, the appraiser must compare the comps to the subject property, making paperwork adjustments to the comps in order to make their features more in-line with the subject property's. The result is a figure that shows what each comp would have sold for if it had the same components as the subject. 

Cost Approach

The cost approach is most useful for new properties, where the costs to build are known. The appraiser estimates how much it would cost to replace the structure if it were destroyed.

So What Does the Appraisal Mean to You?

Your personal loan approval is accomplished early in the loan process, but final loan commitment usually hinges on a satisfactory appraisal. The bank wants to be sure its investment is covered in case you default on the loan.  If the property appraises lower than the sales price, the loan might be declined, but that isn't the only hurdle it must pass. Other facts on the appraisal can be a problem, too: if the appraiser notes some building defects, the underwriter can call for additional inspections.   If during inspections a price reduction was agreed to, and it was noted that the price reduction was in lieu of repairs being made, the underwriter can request the inspection report and ask for any of the items to be corrected before closing.  Those are just a few examples of negatives that could stall your purchase.

An Appraisal Isn't a Home Inspection!

Appraisers make notations about obvious problems they see, but they are not home inspectors. They do not test appliances, look at the roof, check the chimney or do any other typical home inspection tasks. Never count on an appraisal to help you determine if the home is in good condition.

If the Appraisal Comes in Low

Don't panic if the appraisal comes in low, because there are often steps you can take to make the deal work. If the appraisal uncovers other problems, remember that most problems are correctable. Try to keep your cool and work through issues one step at a time.

At the same time you are waiting for the appraisal the bank is finalizing your financial approval – there are still some loan questions that you will probably encounter.  In your haste to pack … do not pack any important financial documents.  TRUST ME, the lender will be calling and asking for some document that you know you have already provided.  But even more important than that is … under no circumstances should you incur any new debt.  While it may seem like a good idea to go out and buy that new refrigerator so it can be delivered the day of closing, it isn’t.  I promise you the lender will pull your credit report 24hrs prior to closing. Any new expenses, especially big items, will become a disaster, and could derail the closing.  My advice to buyer – especially to a first time buyer is if you cannot pay for an item in cash … don’t purchase it.

It’s getting close to closing time … so keep you cool and you will soon be in your new place.