- BUYING RESOURCES -
Pre-closing
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Congratulations on having your offer accepted! Now begins the crucial pre-closing phase.
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PRE-CLOSING
"Pre-closing" may also be referred to as:
- Due diligence period
- Inspection period
The pre-closing phase can span several weeks, typically averaging around 45 days after the offer is accepted. However, the timeline can vary based on your funding source.
During this period, you'll be in constant communication with mortgage and title companies. Responsiveness is key to ensure a smooth and swift closing process.
YELLOW SAYS...
HOW TO CLOSE FASTER
The biggest determinant in how quickly your loan closes is YOU. Speed up the closing process by promptly responding to communication from your mortgage and title companies. Delays in response can lead to prolonged closing timelines.
ADDITIONAL RESOURCES
CLOSING GUIDE
Florida Title & Guarantee Agency provides a comprehensive summary of the closing process. Refer to their PDF guide for detailed insights.
- THE PRE-CLOSING PERIOD -
Below is what you're likely to see during the pre-closing period
APPLY FOR MORTGAGE
After your offer is accepted, you'll officially apply for the mortgage, which involves a more detailed process than the pre-approval stage. Be prepared to submit extensive financial documentation and ensure the property meets specific lender requirements.
FINANCIAL DOCUMENTS FOR MORTGAGE APPLICATION
MORTGAGE DOCUMENT CHECKLIST
CREDIT CHECK
Your lender will conduct a credit check and you will pay for this out of pocket.
COST: $15-50
APPRAISAL
Lenders require a detailed appraisal to ensure the home's value aligns with the loan amount. An appraisal is a far more detailed price analysis than the estimate YELLOW has completed.
The appraiser will produce a report that shows the fair market value of the home by comparing it to recently sold homes in the neighborhood. Also, the report will list detailed information about the property and the neighborhood. You will pay for this out of pocket.
COST: $350-450
Here's an actual appraisal as an example:
INSPECTION
YELLOW provides an inspection report for every home listed with us, but some buyers may choose to do an additional inspection.
All inspections on YELLOW are completed by independent inspectors to prevent any conflicts of interest.
The inspection uncovers any potential issues with the home - structural, plumbing, electrical, etc. - that may not be visible when you visited the property.
Nearly every home inspection - even those on new homes - will turn up some issues. Some are minor and can either be ignored or resolved through negotiations. However, some cannot be ignored.
You can make a list of issues you’d like addressed by the seller and the seller can negotiate what they’re willing to (and not willing to) fix. If an agreement cannot be reached before a certain date, you can walk away from the property without penalty.
NOTE: If the home is vacant, you’ll need to contact the utility companies (power and water) to get services turned on if you’d like to do an inspection. This is not an uncommon request and the utility companies can assist you with this process.
COST: $300-500
ADDITIONAL RESOURCES
WDO INSPECTION
A WDO (wood destroying organism) inspection report is separate from the home inspection discussed above. It is done by a pest company where they inspect the home for evidence of an infestation or damage caused by wood destroying organisms. Commonly known as a termite inspection, the WDO Inspection is often mandated by lenders and FHA loans.
COST: $75-200
SEPTIC INSPECTION For homes with a septic system
Septic systems are located underground and it is impossible to tell their condition without an inspection. The mortgage company usually requires this inspection if the home has a septic system.
These inspections can be more expensive since the inspector must locate the system and dig to see it. Buyers will have to pay for this out of pocket.
COST: $500-700
SEWER/PLUMBING INSPECTION
This inspection is optional.
With this inspection, an inspector typically uses a video camera to crawl through your pipes to make sure they are in good condition.
Here's who we suggest these inspections for:
COST: $100-300
SURVEY
The title company will likely do a property survey to ensure the piece of land you're buying is the accurate dimensions and acreage, and that none of your neighbors have encroached upon your property lines.
Buyers have 5 days after receiving the survey to review it and notify the seller if issues are found. Sellers then receive 30 days to resolve the issue. If the issue is not fixed in the set amount of time, the time can be extended or the buyer can cancel the contract and have their deposit returned.
COST: $350-450
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TITLE INSURANCE
"Title" refers to someone’s legal ownership of the property.
Buyers taking out a mortgage will be required by the lender to purchase lender’s title insurance. This covers the lender up to the amount of the loan if any problems arise with the home’s title after financing.
The seller will pay for a title search to ensure there are no issues with the title. They will also pay for a separate owner’s title insurance policy as protection for the homebuyer in case a title problem arises in the future. It is issued for the amount you paid for the home.
Buyers have 5 days after receiving the title information to review it and notify the seller if issues are found. Sellers then receive 30 days to resolve the issue. If the issue is not fixed in the set amount of time, the time can be extended or the buyer can cancel the contract and have their deposit returned.
The title company typically handles these issues and will work with the buyer and seller to remedy any issues within the terms of the contract.
COST: Varies depending on the home price and mortgage amount. The cost is regulated by the State of Florida and is as follows:
Title issues do occur. Here's why you need it insured:
ADDITIONAL RESOURCES
HOMEOWNERS INSURANCE
Every lender requires you to have homeowners insurance.
If you already own a home, you can call your insurance agency and let them know you’re buying a new home. They will write a new policy.
If you don’t have an insurance agent, you have a couple options.
Option 1: BUY INSURANCE DIRECTLY
If you know exactly what coverage you need, buyers can contact insurance companies directly to buy a policy.
Option 2: USE A BROKER
Many buyers, especially new buyers, use the services of an insurance broker. The broker will shop around and find a policy that meets the coverage you need.
YELLOW SAYS...
USE AN INSURANCE BROKER
We suggest buyers use an insurance broker. It makes the process much easier.
To find an insurance broker, we recommend a basic internet search in the location of your new home (i.e. Homeowner insurance brokers in Ashburn). A local agency will have more knowledge of the coverage requirements and will help find what's right for you.
The insurance payment usually isn't directly paid by you. The payment is rolled into your monthly mortgage payment. The insurance is technically paid by you, but it is the bank making the payment to your insurance company.
Your lender will open an escrow account and handle the payments to the insurance company. Be aware that you’ll probably make an initial payment for insurance at closing as part of your closing costs.
THE BIGGEST HOME INSURERS
There are some online upstarts that are making headway:
ADDITIONAL RESOURCES
FLOOD INSURANCE
It’s possible you found a great home, but it’s located in a flood zone. You’ll have to get insurance for that, too.
Insurance to cover this risk is usually not provided in a homeowners policy so it must be purchased separately. The average cost of flood insurance in Florida's largest cities ranges from $350 to $950 per year.
FIND YOUR FLOOD ZONE STATUS
Flood Map LegendTo buy flood insurance, you must go through one of the federally regulated companies. According to FEMA, if your insurance agent does not sell flood insurance, you can contact the NFIP Referral Call Center at 1-800-427-4661 to request an agent referral.
Florida program info:
UTILITIES
Before closing, you will need to set up the utility services at your new home. This includes both power and water at a minimum, but you may also need other services like gas or propane. Services like phone, internet, cable, and security can be scheduled now, but are not needed before closing.
To establish your utilities, it is usually easiest to call the utility company. That way you can find out what they will need from you to turn on their services. Sometimes this can be done over the phone or internet (especially if you are already a customer), but often it requires visiting the utility company – especially for power.
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THE MOVE
Though you may not yet know the exact date you will be moving, you need to do the best you can to prepare.
Experts recommend planning for a move 6-8 weeks before actually moving. That means you should be looking into moving or truck rental companies not long after your offer was accepted.
AVERAGE LOCAL MOVING COSTS
The average moving price for local moves is $25 per hour per mover. However, that price can be higher depending on your location within the country and time of the year (for example, summer, Friday's, and the end of the month tend to cost more).MOVING ALTERNATIVE - CONSIDER "PODS"
"POD" style moving is where a moving company drops off a portable storage unit at your home. You can load it on your own time and the moving company will pick up the container and ship it to your destination.
There is usually a monthly fee and a shipping fee, but these costs are much lower than any professional moving company.
"PODS" is the brand name of one company, but there are many to choose from.
ADDITIONAL RESOURCES
NEARING THE CLOSE
At least three business days before closing, your lender must send you a Closing Disclosure. This form lists all final terms of your loan such as closing costs and the details of who pays and receives money at closing.
Also, a day or two before closing you will want to complete a final walkthrough. Here you will verify that the house has not been damaged and any items you wanted to address were completed. If everything looks fine, it’s time for closing.
ADDITIONAL RESOURCES
