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A Comprehensive Guide to A Trouble Free House Closing

Happy couple signing a contract together at office
St. Johns Title
St. Johns Title

Who is the Title Company and what do they do?

Are you Buying or Selling a home? Whatever side of the transaction you happen to be on, you will want to know the common snags and setbacks that can occur while prepping for the big day. This guide is designed to help you see any obstacles before they occur, and to provide a few pointers as to how to plan for, or even avoid them, on the way to a smooth and headache-free closing.

Q. I am about to make (or accept) an offer, and I am ready to sign the purchase and sale agreement, what should I do next?

Congratulations, you’re on your way to Selling (or Buying) your home. If you haven’t already done this, now is the time to be ready for certain benchmarks in the contract timeline: Purchase Financing, the Title Process, the Property Inspection, and Closing.

Purchase Financing

Q. I am a buyer (or I have a buyer) who is obtaining a mortgage to cover a portion of the purchase price, what should I do now?

There are a couple of key things that a Buyer and Seller can do to streamline the pre-closing process when a mortgage is involved.
Get Organized
If you haven’t done so already, get your documents together. If you think you have everything you need, check again.
 
The lender providing financing will need to conduct a thorough examination of a Buyer’s financial picture before issuing a loan commitment. To do this, a Buyer will need to provide the lender with their (and their spouses) paystubs, bank statements, tax returns, and investment records. The lender may also ask to review any other financial records (like inheritance information or divorce records) before issuing a final loan approval. 

Try to anticipate potential setbacks, like any credit or employment-related problems you know exist and ask what can be done to address those items. 

A smart Buyer will ask their lender for a checklist prior to commencing the home search.

Assembling these items as early as possible (even before entering into a contract) can significantly speed up the approval process.

Financing Pre-Approval

A smart Buyer is a pre-approved Buyer. Not only will obtaining a conditional pre-approval for a loan help a Buyer determine how much they can afford to spend on a new home, but it can also make their offer more attractive during the negotiation process. The Seller will have the confidence that the Buyer will be able to complete the purchase and all involved can expect that the loan application process will be completed much more quickly. Generally, pre-approved Buyers who have been pre-approved are already far enough along in the loan process that the only remaining items are a final credit review and property appraisal. Given the option, Sellers may be wary of entering into a contract that involves financing contingencies with a Buyer that has not been pre-approved.

Choose an experienced Lender/Loan Officer
Whether you use a mortgage broker, or work directly with a lender, ask questions to make sure the right person is assisting you with your purchase. Asking questions to identify the average time for processing a loan application and how quickly they will be able to complete your mortgage are critical. While every closing has the potential for holdups, using an engaged and responsive loan officer is an easy way to avoid issues with your financing on the home.

Q. I am a seller with a cash buyer (or I am a cash buyer). Since there is no lender involved, the closing should be a snap, right?

Yes and no. The conventional wisdom is that a cash deal goes more smoothly than a purchase with mortgage financing. To an extent, this is true. Without a loan involved, the parties will not have to consider a timeline that includes loan underwriting and approval, property appraisals, or the production of loan documents. However, whether the purchase involves financing or not, there may be unforeseen title defects that can be revealed during the search process and snag the deal.

The Title Closing Process

Choose an experienced and responsive Title Company.
Once the Contract is signed, the Closing Attorney or Title Company that is selected to close the transaction will complete a series of tasks, including conducting the title search, issuing the title commitment, curing and clearing title requirements, coordinating loan documents, and scheduling closing. And that’s just what happens prior to the closing.

The Title Company that you choose to address each of these tasks can make the difference between a quick and smooth closing, or a stalled nightmare of uncertainty, delays or worst of all, a future claim that costs you thousands.

Communicate, Communicate, Communicate

Even the best Title Company can be slowed down if the parties, their realtor, or their lender are not responsive to the information requests made by the title agent.

As soon as possible, a Buyer (or the Buyer’s agent) will want to provide the Title Company with their contact information and the contact information for their lender. 

The sooner the Title Company communicates with the lender, the faster they can provide a series of title documents that the lender will require.

The Seller should also be ready to provide contact information and information regarding their ownership.

Giving the Title Company authority to access existing loan information will help get a loan payoff secured quickly.

Providing any related Homeowners Association or property management information as early as possible will ensure that there won’t be any hidden surprises in terms of transfer approvals.

Communicating with the Title Company early in the closing process, and being available to answer any questions regarding the transaction is an easy way to speed up the closing experience.

 
Expect the unexpected, unless …
A Seller can avoid last-minute headaches by asking the Title Company to perform a preliminary title report when starting the sale process. This is always a good idea because it gives a seller a roadmap of items that will need to be addressed prior to selling his or her home. This is especially true if one suspects the possibility of a prior lien, estate issue or divorce problem that may affect title. Getting this report as early as possible, even before listing the home for sale, can help clarify issues early and avoid unnecessary delays in closing.

The Property Inspection

Q. The Property needs an inspection, what can I possibly do to speed that timeline up?

The Inspection is intended to make sure the Buyer is getting exactly what they bargained for. Working together, a cooperative Seller and an informed Buyer can get past this step easily and without conflict.
Review the property for issues prior to offering for sale.
 
The easiest thing a Seller can do to speed up the closing timeline is to make sure that the home is in the condition as described to the Buyer.
 
Inspection Reports and repair disputes can significantly delay closing, or even prevent it from taking place. This can be avoided by completing all required repairs and having the property cleaned and cleared of debris, trash and personal items.
 
A Seller may consider having a general building inspection before listing his or her house for sale. An inspection may reveal problems that the Seller was not aware of. Being aware of this new information, the Seller can then make the informed choice to either correct these issues, offer an amount to the Buyer to offset the costs to correct them, or consider selling the property in an “AS-IS” condition. Beware that offering the property “AS-IS” doesn’t assure closing as a Seller may be required by law to disclose any “known” structural defects to the new buyer.
 
A Buyer considering an “AS-IS” contract should always insist on an inspection and a right to cancel in the event a significant issue is disclosed. While a Seller may not necessarily have to repair the problem, the parties can decide what will need to be takin care of before the closing.
 
If there is an agreement to make repairs, create a schedule for these items and stick to it. Make sure any repairs that are agreed upon are completed prior to the final walk through.
 
Know what the inspections are looking for and make sure all Warranties, Bonds and Insurances are current and in effect.
 
An inspection report generally reviews a property in three separate forms, each with its specific area of focus. The first inspection that takes place is “General Inspection.” The General Inspection is a review of all of the major systems (plumbing, electrical, HVAC) for defects or repair and it also checks to make sure that the major appliances are in working order. The second type of inspection) is the “Structural Inspection.” The Structural Inspection is often included in the General Inspection, but it specifically inspects the property for structural issues involving the roof, walls, foundation doors and windows. The third inspection is known as the “WDO inspection.” “WDO” stands for “Wood Destroying Organism.” The WDO inspection checks for insects, arthropods or plant life that damages or infests wood in a home, including termites, beetles, borers and wood-decaying fungi.
 
A Seller that has concerns as to whether there is an issue that may arise in an inspection will want to make sure that they have reviewed the status of any appliance warranties, termite bonds or homeowner’s policies that may be in effect. Making sure these items are current and in effect can mean the difference between closing or finding yourself with a canceled contract and a costly repair bill.

Title Closing

Q. The Property needs an inspection, what can I possibly do to speed that timeline up?

The Inspection is intended to make sure the Buyer is getting exactly what they bargained for. Working together, a cooperative Seller and an informed Buyer can get past this step easily and without conflict.
Contact the Title Company, the Lender and the Realtors a week prior to closing.
Contact the Lender and make sure they have everything they need for closing: proof of insurance, cancelled checks, and the title company fees.
 
Federal law requires that the lender provide the borrowing buyer with a preliminary closing disclosure at least 3 days prior to closing. If the Buyer has not received the disclosure, there can be a delay.
 
Contact the Title Company and make sure that they have given the Lender everything they need to close.
  • Does the Title Company have the loan package, the Sellers payoff and the estoppel letter?
  • What is the Buyer’s cash to close?
  • What are the Seller’s anticipated proceeds?
Contact the Realtors and make sure that the property is clean, the keys, garage door openers and fobs are collected and that they have coordinated with the Parties, Realtors, Lender and Title Company for the date, time, and place of closing.

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St. Johns Title is an attorney-owned real estate title firm founded to provide clients with a service partner that exceeds their expectations. What sets St. Johns Title apart is our commitment to the highest level of service and value for all of our clients.

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