|Timelines (Buyer, Seller, Title, Realtor)|
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First-Time Home Buyer Timeline
1. Buyer Call LO to make a loan application to get preapproved and find out how much house you can afford, based on the lender’s guidelines. Most of these guidelines are set by federal agencies (FNMA, GNMA) which all lenders must abide by.
a. LO pulls credit report then
b. asks for supporting docs from buyer – this documentation is verification of income, employment assets, etc. that show on the buyer’s loan application. These are bank statements, tax returns, W-2s, written verifications of these items, letters of explanation of items that may show up on your credit report, etc.
2. SellerList house with realtor or put up for sale by owner.
3. RealtorDecide on a title co. to use for closing – while buyer is shopping for a home. Tell the buyer’s loan officer who you want to use for title work & closing.
a. Cash purchase: A cash purchase means the buyer does not need a loan to buy the property – the buyer has enough cash on hand to do so. In cash purchases, it is the realtor who drives the bus when it comes to referring or choosing a settlement agent to close on the purchase.
b. Financed purchase: The loan officer or bank, ultimately has the right to decide which settlement agent to use to do the title work and closing for his loan. The loan officer drives the bus.
i. However, the realtor needs to ask both the borrower and the borrower’s loan officer to use Jett Title for the title work & closing…as early in the process as possible, before the loan officer has ordered the title work form someone else.
ii. Realtors wield a big stick of influence in who the loan officer uses for the title work and closing. Why? Because realtors represent a potential stream of referral business to any loan officer, so any professional loan officers will try to make realtors happy whenever possible, unless the loan officer likes to play hardball. Realtors can play hardball too: One well-known and respected realtor in Lexington when told we were not on the bank’s approved list demanded in no uncertain terms that we be used “Well, get him on it!” And with one email we were on it, and within two months we were closing all that bank’s Central KY mortgage loans because they loved our service excellence so much. This bank, years later, continues to be an excellent client of Jett Title for both residential and commercial title work & closings.
iii. Few banks have approved lists (a select group of service providers that must be used) for settlement agents, appraisers, etc., but most banks do not have approved lists and are free to use whoever the borrower and/or realtor asks to be used. Ask to use Jett Title as early as possible in the process.
iv. If Jett Title is not on their approved list for closers it can be very easy to get on it. (Although there are differences, the terms “Closer, settlement agent, title company, real estate attorney” are all commonly used to refer to that individual or entity that performs the closing function – title work & closing – of a real estate transaction, depending on licensing, etc).
4. Buyer finds home – makes offer, negotiates and signs a contract for a purchase price
a. SellerReceive an offer and negotiate sales price. Realtor will advise and direct this process.
b. SellerSign a purchase/sales contract, listing a target closing date in the future, the good faith deposit amount, any and all conditions of the sale.
5. Buyer calls LO to lock in interest rate
6. Buyer LO gets contract, etc. then orders appraisal
7. BuyerOnce the appraisal comes in fine, the loan officer orders the title search from title company.
a. RealtorFax the purchase contract and seller’s realtor contact info to the title co.and loan officer so we can call and get payoff information from the sellers for their mortgages.
b. RealtorLoan officer sends a title order (& contract, most times) to the title co.
c. TITLE Receive title order
8. RealtorTitle co. performs title search, and sends title commitment to loan officer.
a. TITLE Do title search – 30-yr for residential purchase, 60 yr for a commercial purchase – search back 30 yars and make sure that every lien that was placed on the property has in fact been released. Those liens that are found to have not been released bust be paid off at closing – from the sales proceeds the seller is to receive, we subtract out the payoffs for these debts, subtract our their closing costs (realtor fees, sales tax, deed preparation) and the seller gets what is left over- this is called the sales proceeds. So, we have to find out what liens need to be paid off I order for the title (deed) to be passed to the buyer free & clear.
9. TITLE Receive search back and prepare title report (title commitment) – list who owns the property, exactly in what names, what liens are on the property, how many parcels there are to the property, the legal description of the property, etc. The commitment is a formal report to the lender that my title insurance company that I represent does in fact commit to insure the lender against loss that may result due to defects that may exist on the title that we did not find in our title search. SEE EXPLANATION OF TITLE ISNSURANCE. Lenders know there are many, many types of title defects that are created as a result of humans preparing deeds and lien documents, and that in the US we depend on humans to accurately list documents on computer records, etc. Humans make errors – intentional (fraud) and unintentional. A bullet thru the brain, whether intentional or unintentional, has the same effect. In the case of real estate, a bullet is a defect or problem that may result in loss of money by a lender and/or a borrower. Lenders know the high incidence rate of defects and the high cost of them and therefore require themselves to be protected against this risk of loss a the borrowers expense – Lenders Title Insurance. This protection makes lenders more readily willing to lend money to borrowers, and this protection is required on all conventional loans in the U.S.
10. TITLE Clear title – we help the lender to compare what liens we find of record on the property versus what liens the seller (or borrower, if a refinance) says should be of record against the property. This can be timely form a few minutes to several days…even weeks/months in rare &/or complex circumstances.
11. SellerProvide payoff information to the title company, for any and all liens you have against you and/or the property. Name of creditor, account numbers, phone numbers, your full social security numbers if you have common names, and a Borrowers Authorization – see attached
***Have one of these BA forms easily downloadable from our website.
12. Buyer does a home inspection – not required as part of the loan process.
13. SellerYou or your realtor must open the home for
a. the appraiser to do an appraisal,
b. the pest control company to do a termite inspection, and a for
c. a home inspector to do a home inspection (a several hour process where they go thru your home with a fine-toothed come to try to identify anything that is in need of repair or replacement.
14. SellerNotify the title company ASAP
a. of any pending marital status changes that you may experience prior to closing.
b. OR if you got married or divorced since you bought the property.
15. SellerRespond to the home inspection
a. You negotiate with the buyer the repair or replacement of the items found by the home inspector – What will be done, by what contractors, at what price, by what date, and who will pay for it…then
b. See that these items are carried out and completed accordingly.
16. SellerBe prepared to respond to the title company if they call you to request assistance
a. Identifying liens (mortgages, judgment liens, tax liens, etc.) that are still of record that possibly should not be.
i. Pull out your home purchase and refinance files/records
ii. Have the settlement statement handy from when you bought the house, AND from any time you refinanced the house or any time you got a second mortgage or a home equity line of credit on the house.
iii. A settlement statement (“HUD-1” or “HUD” or “HUD 1-A”) is the summary of the transaction, it lists all the numbers on the buyer-side and seller-side. It is a legal-size, multi-page document, and is typically the very first document reviewed in any closing, and its signature page has both buyers and sellers on it. A HUD from a refinance may be only one page, but it is commonly more.
b. Regarding bankruptcy you may have filed in the last 10 years, pull out those records and be ready to provide them to the title company to evidence liens that were made invalid.
c. Providing any Final Divorce Decrees and Property Settlement Agreements
17. SellerAwait the buyer’s final approval of their loan.
18. Buyer LO, receives title within 1-2 days, and appraisal within 2 weeks, then sends the loan document package up to underwriting (UW) for approval.
a. UW reviews and typically asks LO to get more supporting docs from buyer.
b. UW sends the loan to audit department for final review.
c. UW may ask for some document of clarification at this stage of anything that is unclear or incomplete.
19. Buyer LO receives final loan approval and then calls buyer and realtors for their available times/dates to close. LO calls title company and schedules the closing.
a. RealtorLoan officer gets final approval, then calls realtors and title co. to schedule closing time/date/location.
b. SellerYour realtor (or settlement agent if a cash-sale) will call you to schedule the closing.
c. TITLE Schedule the closing with all parties
20. TITLE We prepare the deed and set of title company documents.
21. RealtorTitle co. gets payoffs from sellers’ lenders, gets commissions & fees from realtors.
a. TITLE Get payoffs – for all liens we find that are valid, we get the lender or lien holder to fax us a payoff statement in writing, so we can pay them off at closing.
b. TITLE Get realtor commissions and all other fees from the realtors that need to be paid at closing by the buyer or seller. Ex: Termite report, home inspection, home warranty, seller-paid closing costs, etc.
22. RealtorTitle co. receives closing instructions form the lender and prepares the HUD ASAP. The closing instructions have all the loan numbers, fees & restrictions needed to prepare the lion’s share of the HUD.
a. TITLE Receive the lender’s closing instructions – this is 2 to 15 pages that list all the lender fees that are to be charged for the loan, and many other requirements that the lender may have for this particular loan – ex: Collect buyer cash to close in a cashiers check; Buyer can not bring more than X dollars in cash to close; sign tax returns at closing, or other document that they need, etc., etc.
23. TITLE Prepare the HUD (Settlement Statement) ASAP. This is a summary of the transaction – it who is who is paying what and who is receiving what. The buyers-side is on the left and seller-side is on the right. The HUD-1 is a governmental form derived by the US Dept of Housing and Urban Development – lenders, title and realtors al refer to this form as the HUD, and its also known as the settlement statement.
a. The buyer’s side shows all the monies they need to come up with (purchase price, closing costs, etc.), and subtracts all the monies they are getting credit for (loan amount the lender is giving them, good faith deposit amount already paid, etc.). The difference is the amount of check the buyer writes at the very end of the closing.
b. The sellers side show what they are getting – the sales price, less their closing costs (realtor commissions, taxes, deed preparation fee to Jett Title), and the difference is the amount of the check that they will receive at the end of the closing.
24. RealtorWe send the HUD up to the lender and loan officer for approval ASAP, exactly as the instructions dictated the title co to prepare it. Problem is, half the time, there is some kind of tweak that is needed to be made to the instructions, by the loan officer, so that we are told to prepare the HUD as the loan officer intended it to be prepared so it matches the good faith estimate within its limits, that was given to the buyer at the beginning of the loan process.
a. RealtorAccordingly, the lender may have to send the title co new/revised closing instructions. Title co. makes those changes & re-submits the HUD to the lender for approval. These changes range from minor to extensive, and are all made behind the scenes, before sending the HUD to realtors.
25. TITLE We send the HUD up to the lender for approval, then to all realtors. Your realtor will review the HUD with you prior to closing. Note – the title company has NO control over when the lender will send us the closing instructions, and we can not complete the HUD until we receive them. The lender drives the bus until we have the instructions. Once we send the HUD up to the lender for approval, we have NO control over how long it takes to get the approval reply form the lender.
26. RealtorAs soon as lender approves the HUD, it is sent to realtors for review/approval.
27. RealtorThe lender then sends all the loan docs to the title company to be printed & copied for closing.
a. TITLE Only after the lender gives final HUD approval will they send us the loan documents. We print them out and copy them for closing. These can be 75 to150 pages for a single loan.
28. TITLE The lender then wires us the loan amount, which we must receive before closing is finished. This wire and the borrowers check they write at the end of the closing is where we get all the monies to pay all the closing costs and liens that show on the HUD. All monies go into our escrow account, and then we pay out 100% of those funds out of our escrow account for all the items that are listed on the HUD. The HUD is a complete and detailed record of all funds received and disbursed by the title company.
29. Buyer The title company conducts the closing: (RealtorClosing.) TITLE Closing – see explanation of a closing for a frist time hoe buyer
a. The title company is a third party, who makes everyone happy. The buyers want a deed & keys to a house, the sellers want a check and all the other third parties who helped make the transaction possible (realtors, appraiser, lender, etc.) want to get paid for their services, the lender needs their docs all signed in the right spots, by the right people in the right ways, money needs to change hands, the sellers’ mortgages need to be paid off, the deed and mortgage need to be made official record at the county clerks’ office after closing…so, who makes all that happen? Jett Title.
b. The closing is a 45-60 minute meeting of buyers, sellers, realtors and loan officer, led by the title company’s closer. Document explanation & signing takes place. Buyer writes a check, seller & realtors get checks. Closing happens at the office of the title company, lender or realtor. Buyer walks out as a new homeowner. Sellers leave to go to the closing of their new home with the sales-proceeds check they just received.
a. What to bring: Show up at closing with your photo-ID AND your legal spouse AND all keys, garage door openers and entry codes.
b. How long it lasts: Jett Title purchase cosings last an average of 45 minutes. Sellers will sign an average of 10 signatures, depending. Whereas the buyer will sign from 50-70 times, depending on the lender and loan type.
c. If you cannot attend closing,
i. POA: Please inform the title company as far in advance as possible, and the title co. will prepare a power of attorney (POA) for you, that is specific to the transaction.
1. Title co will email the POA to you with very specific and simple instructions of how to sign, get notarized and return the POA to the title co.
ii. If a POA will not work, then we can have a notary closer come to you, where ever you are in the U.S. and close with you.
iii. Your sales proceeds: Give the title co. instructions on how you wish to receive your sales proceeds – an address at which to FedEx you a check, or wire instructions for electronic delivery of your funds. Send the folowing wire instructions to the title company:
1. Bank name
2. Bank’s phone number
3. Bank’s wire-specific routing number (Many times banks routing numbers for checks and wires are different!)
4. Account name
5. Account number
31. Buyers, sellers and all parties are very happy. SellerLeave the closing with a check and a smile.
32. Buyer Title company does lots of behind the scenes things, one of which is recording the deed and mortgage downtown to the county clerk’s office to make them official record.
a. TITLE Process the closing document package – multiple copies of several documents must be made due to each lender’s special requirements, we mail out all checks for the items on the HUD, and wire or FedEx out payoffs of all the seller’s mortgage & liens tha showed on the HUD. Scan all docs in our system. FeEx all loan docs to the lender. Take deed and mortgage to the county clerk’s office of the county that the property resides in to be recorded on their official records. Issue final lender’s title insurance policy to the lender, and to the borrower/buyer if they bought an Owner’s Title Insurance policy. Put all required ledgers and docs in the file per our title insurance underwriter’s guidelines for proper record keeping, future audits and easy document retrieval is needed.
1. RefiBorrower shops lenders for interest rates, getting loan scenarios or estimates or rates and fees.
2. RefiBorrower chooses a lender and makes a loan application with a loan officer
3. RefiBorrower collects and provides the loan officer with all required supporting documentation (income, asset, employment verifications, statements, W-2s, etc.)
4. RefiLoan officer
a. pulls the borrower’s credit report
b. locks in your interest rate
c. Sends loan package to the lender’s underwriting department (UW) for approval
5. RefiLoan officer asks for more docs to clarify items.
6. RefiLO receives approval
7. RefiSchedule closing with borrower and title company