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STEP-BY-STEP TRANSACTION GUIDE
What you can expect after your offer is accepted:You have entered your Escrow Period. This is defined as the time period between contract acceptance and the closing date. Usually, this is around 30 days for resale properties to allow time for financing, appraisal, and inspection requirements. The closing company will be in contact with you shortly after receiving the contract to request any needed information, such as your lender contact information, etc.Once all parties sign and agree to the terms of the contract, the contract is considered "Executed". Note, any time frames stipulated in the contract will be counted from the Executed Date written on the contract (bottom section of page 7). For example, if your option period is 7 days, and the contract was executed on the 10th, your option period will end on the 17th at 11:59p.m. Now that your contract has been executed, your earnest and option money checks will be dispersed. In most cases, a courier from the designated title company will come to your home or office, whichever is more convenient, to pick them up. In the event that I am holding them for you, they will be delivered by me or courier to the closing office. The closing office will deliver the option fee to the seller. Now that the title company or closing office has officially received your checks the contract becomes "Receipted" (page 8 of the contract is completed at this time to serve as receipt of earnest and options fees). Your Option Period begins. During this time, you will want to have any inspections arranged and completed with ample time to review and discuss the findings. You may choose to attend the actual property inspection, if you wish. This typically lasts 2 to 3 hours. Any issues regarding repairs or seller allowance should be addressed during your option period. In general, regardless of property age, you can expect to see several pages of items listed on your inspection report. If you'd like to preview a sample inspection report, I may provide one. The inspector is available to explain any items of question in further detail. Any request for repairs, changes to contract terms or repair credits, will be specified with an Amendment; see a blank amendment here. Seller and buyer must agree to the terms within the amendment and sign for the changes to be valid. With regard to repair items, this should be agreed upon within the option period. Reason being, if the seller doesn't agree to any repair requests via an amendment by the end of your option period, you may chose to opt out of the purchase without forfeiting your earnest money. Otherwise, the contract remains as-is and any termination thereafter will result in the loss of your earnest money (few exception apply per the contract). After your option period ends, it's just a matter of completing a few more steps before your closing date. Apply for a Mortgage. Make sure you Loan Application is completed with the lender. NOTE: You will probably have to pay a loan application fee of $100 to $300. Some lenders also charge you prepaid points. (One point refers to 1% of the loan amount. Points are paid to the lender or mortgage company to cover their cost for the up front processing of the loan.) You may decide to "lock in" the rate at this time, or the lender may allow you to do it at a later point in time. (If you have been pre-approved for a loan, some of the steps in this process will have already been completed.) Also during your escrow period, you'll receive several documents regarding closing. As stipulated within different time frames of the contract, the following items will be received or ordered: Title Commitment: A report made by a title company stating whether there are any other claims to ownership of a property. A necessary step before a mortgage loan can be approved. Here's a quick and basic overview of the four sections of the Commitment for Title Insurance. In general, a title commitment is a commitment by the title company to insure the sale of the property and issue a title policy if conditions in the commitment are met. Please contact your escrow officer with any questions about a particular title commitment or transaction. "A" is for "Actual Facts" In other words, this is the "Who, What, Where and How Much" of the transaction. You'll see the names of the seller and buyer, a description of the property, the sales price, and the name of the lender if any. "B" is for "Buyer Notification" of areas where other parties have some interest or control of the use of property. An example would be a utility easement, where the city would have a part of the land reserved for their use, or a building setback requirement that prevents the homeowner from building within a certain distance from the front of the property. These items are not covered. "C" is for "Clear to Close" These items must be resolved in order to transfer title to the new owner. This would include such things as a mortgage to be paid off, marital status, home improvement liens, unpaid taxes, or a requirement that another person - such as an heir or a former spouse - participate in the sale of the property. "D" is for "Disclosure" This last section outlines all parties who will collect any part of the insurance premium, including underwriters, title agents and attorneys. Title Insurance: is a policy to protect the future of your real estate investments. We start by researching the full history of property as completely as possible through public records- in Texas many, property records go back to Spanish land grants in the 1880's! We clear up any known issues and then assume certain kinds of additional risk on behalf of the owners. A title policy premium is a one-time fee that is designed to protect owners and their investment against certain future claims. Through the years, a property may change hands many times through sale, inheritance, marriage, divorce, foreclosure or bankruptcy. Each transfer is an opportunity for an error in title to arise, which could affect whether the buyers have full ownership of the property. *Title Committment & Insurance Explanation courtesy of Independence Title Home Owner's Association Documents: The governing documents of either a condominium or a HOA subdivision tell you how you can "use" your property. The documents fall into three categories: the articles of incorporation (associations are commonly incorporated under the not for profit portion of the state law), the declaration (your property rights), and the by-laws (the day to day operation of the association). Most associations will also have a set of "rules and regulations" which are board actions as to what the residents, guests, or tenants may do. 
Seller's Disclosure: A form which discloses whatever the seller is aware of concerning the property. The seller will fill out this form and give it to the buyer within the time specified in the contract. This may be received before offer acceptance, however if received during your escrow period as outlined in the contract, you will have seven days to review. This document must be signed by the seller and the buyer as acknowledgment of receipt before closing. Homeowner's Insurance: This is an insurance policy that covers the cost of repairing or rebuilding your home in the event of a natural disaster. Obviously, this is beneficial to both you and the lender. This is something that you will shop around for on your own. You can start with your auto insurance company, since you may receive a discount for having more than one policy with the same company. Your final decision should be made at least a week before closing so the insurance, lender and escrow company may coordinate the appropriate documentation. Home Warranty: Most contracts call for the buyer to receive a home warranty, which covers repair costs for heating and air conditioning units, major appliances, etc., usually for a period of a year after the closing. Typical cost is $350, and the title company can suggest a company. The buyer selects the home warranty company, and the seller pays up to the amount specified in the contract. One to two weeks before closing, you should plan to have your utilities transferred or established. An Appraisal will be ordered at some point during the escrow period. This is usually required and ordered by your lender in the event you are obtaining financing. This fee is around $350-$400, and sometimes required to be paid to the lender at the time of order. Per the contract, if the seller doesn't provide a Survey and/or your lender requires a new survey, this is also ordered at this time. This fee is typically $400-$475 and may be paid at the time of closing. It's the week before closing, and your closing time and place should be tentatively scheduled. Fridays at 3pm are not advisable. In general, you want the closing office and lender to have at least half the day to complete wiring and funding requirements after you have signed all the documents at closing. Your closing and funding day may be a day apart. "Funding" takes place when funds are wired to the appropriate parties. Some sellers may not release keys to the buyer until funding takes place. In general, new owners take possession after funding, not after closing. Plan to bring at least two forms of identification to closing, including your Driver's License. A certified check made out to the closing company should also be brought in the amount specified on your settlement statement, line 303. On the Day of Closing, you can expect to receive the house key(s), mail key(s), garage door opener(s), and any other property specific documentation, such as appliance warranty paperwork. At closing, the escrow officer will review all documents with you. To begin, the Settlement Statement will be presented. This is also known as the "HUD" or closing statement. 
Escrow Officers usually start with page 2 of the closing statement. This shows the breakdown of closing costs for both buyer and seller. The first page summarizes the totals to come up with the bottom lines for buyer and seller.
IF THE SELLER HAS AN FHA LOAN, THE PAYOFF CHECK MUST BE RECEIVED BY THE LIEN HOLDER NO LATER THAN THE FIRST BUSINESS DAY OF THE MONTH OTHERWISE THE SELLER HAS TO PAY AN ADDITIONAL MONTH OF INTEREST (SEVERAL HUNDRED DOLLARS). IF FOR NO OTHER REASON, THIS IS WHY YOU SHOULD NOT CLOSE ON THE LAST DAY OF THE MONTH. Closing Statement Checklist - What to look for when you review your HUD: When you see your closing statement, whether you get a fax the day before closing or it's handed to you at the closing table, there are few TOP PRIORITY things to double-check. Of course, the title company and lender are part of the quality-control process, but you may not always be working with the title and mortgage professionals you most trust - and you deserve the best diligence. Bring this list with you (okay, hide it under the table if you want to...) and make sure any changes are identified BEFORE the transaction is closed. Be sure any terms written in the special provisions of the contract are taken care of on the HUD if applicable. Of course, all items on the closing statement are important, but these are areas where mistakes commonly occur that can really slow things down: PAGE 1 - Spelling of your clients name(s) (Section D) - Property address (Section G) - Name of lender, if any (Section F) - Sales price (line 101) - CREDIT for earnest money and option fees (Section 200) - Loan amount, if any (line 202) - CREDIT for property tax paid by Seller (lines 210-214) - CASH DUE AT CLOSING (line 303) PAGE 2 - Escrows for taxes/insurance/PMI/MIP (Section 1000 - NOTE: if your client makes a substantial down payment, they may not be required to set up escrows for these) PAGE 1 - Spelling of your clients' name(s) (Section E) - Property address (Section G) - Sales price (line 401) - Existing loan payoff(s), if any (Section 500) - Property tax paid by Seller (lines 510-514) - CASH DUE TO/FROM SELLER AT CLOSING (line 603) PAGE 2 - COMMISSION (Section 700) - Loan charges paid by Seller, if any (Section 800) - One year service warranty - if required per contract (Section 1300) *Closing Stmt Explanation courtesy of Independence Title. Texas Residential Real Estate Forms | Austin Mortgage & Loans | HUD Home Listings | Austin Area Resources Austin TX Real Estate Agent | Austin Real Estate MLS Portal | Site Map | Bookmark My Web Page
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