➤ What is the difference between an inspection and an appraisal?
There are a few key differences between an inspection and an appraisal. An appraisal is required by most lenders, whereas an inspection, while highly recommended, is optional. The appraisal determines the value of a home, while the inspection determines the condition of the house.
➤ What is the difference between a preapproval and a prequalification?
Prequalification is the first step in the mortgage process and estimates how much you can borrow; whereas, a preapproval gives you a more concrete loan amount after an in-depth investigation of your finances is completed.
➤ How do I know what my closing costs will be?
Three days before closing, you will receive a Closing Disclosure statement (and/or HUD-1), which will summarize the final amount of cash required to close at settlement from your lender. The closing costs will include items such as loan fees, escrow fees, broker commissions, title search, title insurance, document preparation, attorney fees, taxes, prorated utilities such as sewer and water, and government recording fees. You can contact our office at any time prior to the week of closing to get an estimate for your closing costs.
➤ What is an escrow account?
An escrow is an arrangement in which a third party holds and disperses funds as part of a contractual agreement. When closing (or settling) on a property, a third party holds the good faith deposit in an escrow account until settlement (generally the listing agent’s brokerage). The closing agent (the buyer’s attorney) will then disperse the funds to the appropriate parties. Using an escrow account helps protect both the buyer and the seller during real estate transactions. Lenders also use escrow accounts to set aside money for property taxes.
➤ What do I need to bring to closing?
Always remember to bring a valid, non-expired government-issued photo identification to closing.
You will receive a closing disclosure and/or a HUD-1 estimating closing costs in advance of settlement. If there are any final adjustments at closing, it is important to bring a blank personal check to cover these costs.
Any outstanding paperwork. If this is required, we will notify you in advance.
➤ Why do I need title insurance?
A title search is performed prior to closing. The search can reveal any liens or encumbrances against the property and help ensure that the seller is conveying you a clear and “marketable” title. Although uncommon, title claims can arise that are not discoverable by reviewing the public records, such as false or forged documents, claims of an heir in the title, and so on. For this reason, title insurance will be issued to protect both the buyer and the lender against any potential flaws in the title.
➤ What happens if I need to extend the closing date?
If any individual needs to change the closing date, all parties must agree and sign an addendum to the original purchase agreement. It is important to ensure that extending the settlement date does not conflict with your loan approval's expiration.
➤ Can a buyer walk out before settlement?
The most common reasons buyers walk away are a bad inspection, a loan denial, a change in personal life circumstances, or the home appraising for less than the purchase price. There are various aspects of the purchase agreement that protect a buyer’s right to walk away in the event of issues such as an unsatisfactory home appraisal. There are other reasons that buyers chose to walk away after entering into a contract that are not protected by contingencies in the agreement. Doing so subjects buyers to loss of their good faith deposit and potential legal action.
➤ I got a message that the wiring instructions have changed. What should I do?
You should never rely on an email or other communication purporting to change wiring instructions already provided to you by our office. If you receive such a communication, contact our office by phone immediately to determine if this is a fraudulent communication. In general, the account and routing numbers for a settlement office’s IOLTA escrow account do not change.
➤ How long does settlement take?
Once a purchase agreement has been ratified, settlement most commonly takes place anywhere from 30 - 60 days later. The average length of time (as of this writing) is 43 days. As long as paperwork is in order and all parties are in agreement, signing documents on settlement day will go quickly, averaging one and a half hours to an hour.
➤ Can I move into my new home on the same day that I settle?
Except in the case of a leaseback agreement, you can begin moving into your new home as soon as settlement is finished!
➤ When do I receive a copy of the deed to the property?
We will mail the deed and owner’s title insurance policy to you after it is recorded with the office of the recorder of deeds, and it is officially made part of the public record.
➤ Can we do a remote closing?
Remote closings have become more common as a result of the COVID-19 health pandemic. If buyers or sellers have opted for a remote closing, be aware that notarial services in the state where the settlement documents are being signed will be required to complete closing. Contacting a notary well in advance of your receipt of settlement documents will avoid potential logistical issues which could delay the completion of settlement. Our office will also undertake various steps to confirm the identities of the parties.
These FAQs are intended to provide general answers to common client questions and are not intended to be taken as specific legal advice. Please review our full site disclaimer for more information.