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For an additional cost, you may need or want to have additional testing performed depending upon findings during the inspection, depending upon what systems exist in the property or simply to obtain additional information for your own knowledge.

Testing may include an evaluation for the presence of wood destroying ants or termites, damage assessment and options for resolution. You may decide to have the property tested for the presence of lead….PLEASE NOTE there are Massachusetts laws that must be adhered to relative to children under the age of 6 when purchasing a property built before 1978. Your real estate professional should discuss these laws with you and provide the necessary documentation.

Some other items may involve an evaluation of electrical systems, heating systems, septic systems, the integrity of the property structure, well water system and a surveyor regarding property lines. In all of these cases a licensed professional will always be recommended.

Once all the issues and items are addressed involving the inspection, testing and evaluations, it will be time to turn your attention to the Purchase and Sales agreement. This multiple page document contains very detailed, but standard language with respect to the transaction. It will minimally contain all of the information in the signed offer and all subsequent agreements made as a result of the home inspection, testing and evaluations performed. It will also contain language relative to escrow funds, title insurance, extensions of time of performance, broker fees, buyer financing, warranties, etc.

If you decide to hire an attorney or if the lender provides one to represent you in your transaction, the attorney will typically include an addendum that provides language to further protect you in the transaction. It is for this reason and more that I would HIGHLY recommend that you obtain legal representation. The seller may or may not secure legal counsel. In the event that the seller does, both attorneys will collaborate when drawing up of the P & S. Once all parties are in agreement, the P & S should be signed or executed. Please note this document, just like the executed offer, is a binding agreement and should be taken seriously.

With the signing of the P & S, additional monies are provided to the seller by the buyer unless the P & S indicates otherwise. Typically, the remaining down payment amount is provided at that time. In instances where the down payment exceeds 5%, I would HIGHLY recommend that you plan to bring the additional monies to the closing. You’ll want to limit the amount of monies being held in escrow that could potentially come into play should the transaction take an unexpected turn for the worse. The decision to do so should be in the offer and the subsequent P & S.

Once the P & S is executed by all parties, the lender will order an appraisal to be done on the property. Typically this is an additional charge that you will need to pay out of pocket prior to the appointment. The appraiser will contact the listing agent to schedule the appointment. You will not need to be present for the appraisal, however, your real estate professional should let you know when the appraisal has occurred.

The appraiser will evaluate the property you intend to buy to determine it’s value.  There are several factors that are taken into consideration.  The value will be determined by comparing the subject property with other properties that have sold in the area.  In some cases, adjustments will be need to be made to come up with the value.  You will receive a copy of the appraiser’s report indicating his opinion of the value of the property you are about to purchase. You’ll want to know that the property was valued at or above the purchase price. The lender will not approve a mortgage loan amount below the value of the property.

In the event that the property’s value falls below the amount to be financed further discussions will need to occur between the parties and, subsequently, decisions will need to be made. There will be three options available:

– you and the seller can re-negotiate the offer price based on the appraised value
– you, as the buyer, can agree to pay the additional monies out of pocket or
– you can terminate the contract if you and the seller cannot agree on a resolution.

The possibility of the appraised value falling below the anticipated finance amount should always be discussed as a “what if” prior to drawing up any offer. This possibility should be a part of the language of any offer as a way of being proactive. You’ll want to decide a head of time what you are willing to do in this instance because TIME IS OF THE ESSENCE.

The underwriter is the most important person in the mortgage approval process, BUT WHOM YOU WILL NEVER SEE OR MEET.  Contrary to popular beliefs, they don’t try to “kill the deal” or work where “loans go to die”. They are critical to the mortgage process, as they are the ones who will approve or deny your loan. They prepare a careful, detailed analysis of the loan package to determine if you, as the potential borrower, present an appropriate level of risk to the lender.

No lender funds or closes on a loan without the approval of an underwriter. Sometimes their job is to simply check over the figures, make sure all paperwork is in order and give the approval. Other times, they may need to look over all of the paperwork in more detail, obtain additional information,  make verifications and make a sound decision based on their experience and good judgment.

Lots of responsibility rests on the underwriter because if they are wrong and the buyer defaults on the loan, it could cost the lender. If they work for a mortgage broker and there are too many defaults, it could cost the company its relationship with the lenders who fund their loans.

My advice to any buyer is to provide whatever the underwriter requests as a quickly and accurately as possible. Your real estate professional should be able to provide you with guidance in interpreting what the underwriter may be requesting from you.

In preparation for closing your loan, you will be issued a commitment letter indicating what remaining items, if needed, are required. The letter is typically issued a week to two weeks prior to the expected closing date. If there are remaining items, you’ll want to make sure they are taken care of as soon as possible as not to delay the closing. These items may or may not be within your control, but you will be made aware of what is pending relative to your loan.     If there are items that you are responsible for providing, you’ll want to do so as quickly as possible….REMEMBER TIME IS OF THE ESSENCE.

Every lender is going to require you to obtain home insurance to protect your investment and their interest. Your real estate professional should be able to provide you with a list of insurance agencies to start your search. The cost of home insurance can vary across insurance agencies so I highly encourage you to shop for the best cost and terms. Bundling your home insurance with your auto insurance can prove to lower your premium, so I always suggest buyers start from there in obtaining a policy quote.

When your mortgage professional issues a pre-approval for your loan, guidelines relative to home insurance costs are provided as it is included as a part of your final monthly payment amount. This figure will allow you to gauge what is doable in your search for quotes. For example, if your loan approval amount requires your insurance not to exceed $600 per year, then that figure would be your guideline in shopping for a rate. Quotes over that amount would need to be eliminated or you could inquire with the insurance company as to how you could lower the rate. Quotes under the figure are great. Just make sure you are clear about the extent of your coverage, your deductible, etc.

When obtaining a quote, the insurance company will need to know some specific information about the property you are purchasing so be prepared to provide that information.

Typically, an entire year’s insurance is required to be paid in full in order for the insurance company to issue what is called an insurance binder. The insurance binder is what is required by the lender as a part of obtaining your loan. Subsequent insurance payments will typically be included in your monthly mortgage payment. The payment is held in escrow and paid by the lender to your insurance company directly. You’ll want to begin exploring your options shortly after you’ve signed the P & S agreement so that you can take your time getting the information, making comparisons and then deciding on the best option for you.

After all the requirements for your loan are fulfilled, the lender will inform you of the date, the time and the location where the closing will occur. The term “Passing Papers” is an accurate description of this process as you will be presented with an abundance of papers for your initials and signature. Pay close attention to how and where the closing attorney instructs you to sign as these are legal documents that must be executed properly.

The lender will provide you with a document referred to as a HUD Settlement sheet that will outline all of the details for your loan including what your monthly mortgage payment will be, what it will include and what your final closing cost will be. You will also be instructed as to how the money that you will need to bring to the closing. I highly encourage you to bring along your checkbook for any costs that could have been overlooked, but required at the time of closing.

Once all the documents are signed, the closing attorney will need to have the deed recorded at the Registry of Deeds for the county in which the property is located. He will instruct you not to enter the property until at which time you have been notified that the deed has been recorded.