Prateek Vashistha

First Time Home Buyers Guide - Tips and Advice 24.18 1 have happened during the escrow period. So let’s break into each of those quickly. Securing that mortgage. We’re going to go back to the mortgage company now that there’s an accepted offer, and say “Look, you pre-approved us for x amount of money. Let’s finalize these details.” And they will want your finances and your W2s and your work information—all the financial pieces of your world. The mortgage company is going to want to see them because they want to make sure that you are going to be able to pay your mortgage payment. That’s what they are trying to figure out. And, so all that stuff gets figured out back and forth between you and the mortgage company until the mortgage is secure, until it’s really set and ready for closing. So that financial side has to happen, securing the mortgage. Home inspection. A certified inspector examines your home and describes all the structural concerns that he or she notices. So you made the offer on the house assuming you had a solid house in place. Maybe, the seller said there was a problem with the roof or there was something. A lot of times you’ll see, when you are going through a realtor, your realtor will know that there are some issues and they will tell you about that. But oftentimes in inspection, we will find other kinds of issues. Maybe there is termites in the house or all kinds of different things can come up during the home inspection. And, another thing I wanted to say about the home inspection is that this is a point where oftentimes, even though you’ve made an offer, it’s been accepted everything is in place, a lot of times the home inspection can change the agreement between the seller and the buyer. Usually in the offer it says ‘contingent on home inspection’. And so once that home inspection goes through, if there’s major problems you can say, ‘Look, you need to fix this or we are backing out of the deal.” So oftentimes deals fall through at the home inspection point. We need to address the contingency. So, generally the purchase offer is contingent on the inspection. So there maybe additional negotiations if the inspection finds issues. I just talked to you about that. But we also, if there were any other contingency that were part of the offer like, “Hey, we need you to fix the roof,” that’s going to be a part of the escrow process as well. It has to get done before the closing so you know that the seller absolutely has done it and has taken care of it so that you can close on the house. Getting insurance. Insurance protects the home and it protects not only your financial interest in the home but it protects the mortgage company’s financial interest in the home. So the most basic part of insurance is insuring the structure itself. If it were to burn down or get taken out by a tornado or whatever, suddenly that investment that you’ve made and that your mortgage company has made is no longer there. An insurance protects that from that situation. So, insurance is going to pay to rebuild that house and bring the investment that you have and the mortgage company has back into the picture. So the mortgage company will insist on you having insurance before the closing. So you need to go out to, hopefully, your local independent insurance agent and engage with them on “Hey, I’m buying this house. Here is the address. Here is the closing date. Please let me know what information you need.” And they will give a quote to you, which you can then hand over to the lender and say, “Hey, here’s the amount of money that I’m going to be paying, or really, is going to be paid usually out of my escrow account,” which we will get to later. And they will figure it into the process. And then before closing, you will have to actually secure that insurance, get a certificate of insurance to your lender so that the closing can happen. So that’s all a part of the process and getting an insurance is an incredibly important part of the escrow period. Like I said, insurance is an important part of your escrow account, which I will address later, but that’s why they need the numbers, specifically. The mortgage company needs two things to close: (1) is to know you have insurance to know that their financial interest is protected but, (2) they need to know how much that insurance is going to cost so they can figure what your monthly mortgage payment will be because of your escrow account. I know I’m using a bunch of big words there but I’ll get to it in just a second. Okay. Talked about you getting the policy into place. Your mortgage company’s proof of insurance prior to closing. We got all that taken care of. Okay. So we have secured the mortgage. We have gone through our inspection. We have taken care of all those things. We have got our insurance in place. And we are ready to close on the house. Generally this is on a given day. Oftentimes the buyer and the seller will come to the same place, a title company, which is in charge of making sure all the stuff happens. And sit down at the table and one side will buy the house the other side will sell the house. Lots of signing of papers, putting things in place. And that is the closing. The date of sale that you actually purchased the house and the seller no longer has any interest in it. So, all the documents will be signed. Ownership of the house will officially change hands to you. So, congratulations! You purchased a new house. But there is a lot of cost involved. Specifically, that happens at closing. So at closing, you are going to see a lot of cost connected there. So they vary with a lot of different expenses. But here are some of the main ones: At closing, you are going to pay the realtors and the title company. So you are going to pay everybody that helped you with the buying and selling process. You are going to pay one year of your home owners insurance. That will be a part of your closing costs generally unless you paid that ahead of time. And a lot of other fees that come with it. So, there’s a lot of different closing costs. And understanding those closing costs really has to do with you talking to your mortgage broker about how this is going to work. What are the closing costs? What are they going to look like? Why do I have them? Ask those questions. Make sure you understand. Because when you’re at closing there are so many things going on, you are signing these papers all this stuff is going on. Everybody else knows how to do this. They do this all the time. So they are kind of zooming through it. And if this is the first time when you are sitting at closing that you are trying to understand everything, you are going to end up leaving that room a little frustrated. And feeling like you don’t understand. So take a little bit of your mortgage broker’s time, ahead of time. Sit down with them and say exactly what costs are going to be in there and have them break it down for you. And then they will do that for you. So closing cost, part of your closing. So you purchased your house. Congratulations! You get to move in. You get to be happy. You are a new home owner. You have invested in something that will provide you tons of joy, maybe grow your family, whatever your future interests are in life. That house that you just purchased has a lot to do with those. That will be the foundation of where those things happen. So buying a new house, being a home owner is super exciting, and a smart investment for the most part. And so, enjoy it. You have done everything you had to do. It was, maybe, three months of paperwork and all this kind of stuff. And now, you are actually moving into your house. So be happy. But I wanted to break it down. At some point, your mortgage payment is going to come out. A lot of times you get a grace period. So the first maybe month, you are living in your house, you don’t have to pay anything. But in that second month, or maybe the third month, you are going to start having to pay your mortgage payment. And that’s generally the same amount of money that your mortgage broker told you from the beginning. It’s often right there. But what I didn’t know when I purchased a new house, and what I want to share with you right now, is that there are absolutely parts of that mortgage payments that are important to understandError! Filename not specified.