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You are under contract! What happens next?
The settlement and closing process in the Triangle Area of NC
Agents and attorneys often use the terms closing and settlement interchangeably but there is a difference.
Settlement=Signing of the paperwork in the attorneys office
Closing = Recording of the deed in the courthouse. That is when you will own the house and get the keys.
In North Carolina attorneys and lender do the closing paperwork, not a title company. Usually the seller doesn’t go to settlement here, it’s basically for the buyers loan and paperwork.After we are under contract I will send the attorney the contract and schedule the settlement. They will be sending you a buyer info sheet to fill out .
Inspections
We will need a home inspection, price depends on the size and age of the home usually between $400-$800. I have several good inspectors I like to use. If you have an inspector you prefer just let me know.
You may want a radon test. Around $150 (radon is not common here but occasionally is higher than EPA recommended limits). Based on the home inspection we may want an HVAC inspection $200, termite inspection $85. If the home inspector finds some structural issues we may want to have an engineer take a look. That can get into the 100’s depending on the time and the report. All approximate costs. I will schedule and have inspectors contact you for credit card info. If you can come to the home inspection it would be great. You will learn a lot about the house.In any case the inspector does a complete digital report with photos. You may want to pay the inspector to come back and verify the repairs were done correctly around $200.
The NC contract says the home is sold “as is”. Because of the due diligence clause in the contract you can decide to buy the house for any reason or no reason during the due diligence period. That is an incentive for the seller to make repairs.
Homeowners Insurance
You will need to have homeowners insurance before the closing. Check with the company that has your cars or previous home first and then compare.
Right before settlement we will do a walk through to make sure the house is in the same condition as when we went under contract.
Utilities
Arrange in advance to have utilities switched the day of closing.
The Loan
The lender will process your loan. You will get a good faith estimate when you make loan application so you will have a very close idea of costs. There are several steps during the underwriting process.
Appraisal
The lender orders the appraisal. When the appraisal comes back the underwriter has to review it and approve it. Sometimes the value will come out at or above purchase price but the underwriter will ask the appraiser for more or different comps.
If the value comes out lower than the purchase price you may need to bring more money to closing and your loan amount will be based on the purchase price. You also may re-negotiate the purchase price with the seller. It’s important to have the appraisal completed before the end of due diligence. If you are getting an FHA loan you won’t have the option of bringing more money to closing.
Your documentation
You will be asked for all kinds of documentation about your work and finances that may seem excessive and maybe crazy to you but just give the underwriter what they ask for asap.
You won’t get your final number for the amount due at closing until a day or two before after the attorney gets the loan package from the lender and prepares the Closing Disclosure.
The Closing Disclosure is a standard settlement statement (it’s the same form in every state) showing all of the debits and credits in the transaction. The attorney collects and disburses the funds so you will only need one wire.
The lender will usually prepare the Closing Disclosure for the Buyer. As the Buyer you will have the closing disclosure 3 days before closing. It should be very close to the loan estimate you got from the lender 3 days after loan application. You will arrange to have the down payment funds and closing costs wired to the attorneys office or bring a certified check. Check with the attorneys paralegal to see which they prefer. If you wire funds don’t wait until the last minute! It can take 48 hours to come through.
Signing (settlement)
You will have a huge stack of papers to sign. You don’t see these before settlement. The attorney will go through each page before you sign and point out the important details. Signing takes around an hour if you sign fast, more if you have questions. The attorney will explain anything you don’t understand.
You will need to bring your driver’s license to settlement.
After the documents are signed the documents are sent electronically back to the lender to review.
The lender will wire the loan proceeds the same day as signing and the deed will recorded that day (Closing) if the signing is before mid afternoon. You will get your keys when the deed is recorded and the house will officially be yours. You may not know the exact amount to have wired depending on when the closing statement is ready. If you don’t know the exact amount, your lender can give you a close number based on the good faith estimate. If it turns out that number is low you can write a personal check for the difference or if it is high you will get a check back from the attorney.
When the deed is recorded the home is yours and you will get the keys.
Happy Homeowners
Originally published on Best Cary Neighborhoods by Marianne Howell Wright
